MOTO-Q NOTES

Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe
Notes in Civil Law Review 2

I. OBLIGATIONS
20% Midterm
30% quizzes and recitations
50% finals

Digest – Sales; starting with Sanchez v. Rigos

- 2 quizzes in oblicon
- Certification that the digest is complete and is in your
own handwriting - from 2 classmates
- - cases penned by justice Azcuna - 2 quizzes

OBLICON – Tolentino
Sales – Baviera
Partnership – Bautista

Common Law – general and ordinary law of a country/

community; unwritten law founded on memorial usage and
natural justice and reason.

Passive solidarity – not always one debtor; may/ may have

2 or more debtors/creditors.

When the fulfillment of the condition depends upon the sole

will of the debtor, the conditional obligation shall be void –
this is true only in resolutory conditions.

Alternative conditions – simple when choice has already

been communicated! If not communicated there is no
consent.

Facultative conditions – is the choice always with the

creditor?

Obligations:

Art. 1156. An obligation is a juridical necessity to give, to do

or not to do. (n)

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2

- it is a civil obligation because of the phrase juridical

necessity.

Q: Does a creditor have a right under natural obligations?

A: Yes

Q: Suppose a promissory note was made:

1/2/93

I promise to pay B P1M

A
Is it civil or natural?
A: It may be civil or natural. Civil-within 10 years
prescriptive period; natural-beyond ten years.

Q: If it was made beyond the prescriptive period, may it be

considered a civil obligation?

A: Yes. If prescriptive period was interrupted or if no written

demand was made. Only if demanded within the prescriptive
period may it be due and demandable.

Q: Is consent one of the essential elements of obligations?

A: NO. It is true only with contracts.

Essential elements of obligation:

1. Active Subject – creditor/obligee

Q: Is any kind of person subject to obligation?
A: Yes. Not only Natural persons but also juridical
entities/persons.

2. Prestation – to give, to do, or not to do.

Q: Is it a thing?
A: No. It is the particular conduct of the debtor.

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Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2

3 Juridical tie – vinculum juris

- that which binds the parties.

Q: When can there be a tie? What creates a tie?

A: when there is an existence of the source of obligation.

Sources of Obligation:

Art. 1157. Obligations arise from:

(1) Law;

(2) Contracts;

(3) Quasi-contracts;

(4) Acts or omissions punished by law; and

(5) Quasi-delicts. (1089a)

QUASI CONTRACTS:

Kinds:

1.Nominate:

a.) solutio indebiti

b.) Negotiorum gestio

2. Innominate – Articles 2164-2175

SECTION 3. - Other Quasi-Contracts

Art. 2164. When, without the knowledge of the person

obliged to give support, it is given by a stranger, the latter
shall have a right to claim the same from the former, unless
it appears that he gave it out of piety and without intention
of being repaid. (1894a)

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
Art. 2165. When funeral expenses are borne by a third
person, without the knowledge of those relatives who were
obliged to give support to the deceased, said relatives shall
reimburse the third person, should the latter claim
reimbursement. (1894a)

Art. 2166. When the person obliged to support an orphan,

or an insane or other indigent person unjustly refuses to
give support to the latter, any third person may furnish
support to the needy individual, with right of reimbursement
from the person obliged to give support. The provisions of
this article apply when the father or mother of a child under
eighteen years of age unjustly refuses to support him.

Art. 2167. When through an accident or other cause a

person is injured or becomes seriously ill, and he is treated
or helped while he is not in a condition to give consent to a
contract, he shall be liable to pay for the services of the
physician or other person aiding him, unless the service has
been rendered out of pure generosity.

Art. 2168. When during a fire, flood, storm, or other

calamity, property is saved from destruction by another
person without the knowledge of the owner, the latter is
bound to pay the former just compensation.

Art. 2169. When the government, upon the failure of any

person to comply with health or safety regulations
concerning property, undertakes to do the necessary work,
even over his objection, he shall be liable to pay the
expenses.

Art. 2170. When by accident or other fortuitous event,

movables separately pertaining to two or more persons are
commingled or confused, the rules on co-ownership shall be
applicable.

Art. 2171. The rights and obligations of the finder of lost

personal property shall be governed by Articles 719 and
720.

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
Art. 2172. The right of every possessor in good faith to
reimbursement for necessary and useful expenses is
governed by Article 546.

Art. 2173. When a third person, without the knowledge of

the debtor, pays the debt, the rights of the former are
governed by Articles 1236 and 1237.

Art. 2174. When in a small community a nationality of the

inhabitants of age decide upon a measure for protection
against lawlessness, fire, flood, storm or other calamity, any
one who objects to the plan and refuses to contribute to the
expenses but is benefited by the project as executed shall
be liable to pay his share of said expenses.

Art. 2175. Any person who is constrained to pay the taxes of

another shall be entitled to reimbursement from the latter.

 certain lawful, unilateral act must concur.

 For negotiorum gestio- there must be
abandonment.

BAR EXAM QUESTION:

A bought a pack of cigar worth P225.00. He paid P375.00.

What relationship was created?

A: Quasi contract; solutio indebiti

Q: A had a fishpond. Lawless events forced to go to Manila

and then Europe. B, who has in the business of buying and
selling fish, realized that it was harvest time, harvested the
fish and sold them to X. B borrowed money from Y in order
to buy the fingerlings.

a. What Juridical relationship was created between A and

B?

A: Negotiorum gestio

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Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2
b. What juridical relationship was created by A with
respect to B and X?

A: to remit the sale of fish sold to X

c. A with respect to B and Y?

A: A must pay the loan to B because it was for the benefit

of A.

d. If A ratified the acts of B, what will happen?

A: A shall be indebted to B

Q: Is innominate quasi contract exclusive?

A: No. Acts or omissions punishable by law.-> crimes and

delicts.

 felony is limited only to the RPC.

Requisites for it to arise:

There must be a conviction. Proof beyond reasonable doubt.

Q: Is there a crime where there is no civil liability?

A: Justifying Circumstances.

QUASI DELICT:

Quasi-delict = culpa aquiliana

- it is not culpa extra contractual or torts.

Culpa extra contractual includes:

1. contractual
2. Extra contractual – includes other sources under 1157.

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Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2
Pineda would say that torts is not quasi-delict because torts
include malicious and negligent acts.

Atty. Uribe does not agree with him. Torts is the same as
quasi delict.

Art. 2177. Responsibility for fault or negligence under the

preceding article is entirely separate and distinct from the
civil liability arising from negligence under the Penal Code.
But the plaintiff cannot recover damages twice for the same
act or omission of the defendant. (n)

Cangco v. Manila Railroad (18 Phil 768)

Q: What were the defendant's defenses?

A: plaintiff was negligent; defendant exercised due diligence

in selecting its employees. (not a good defense. It is raised
only in quasi delict.MRR’s liability was based on contract of
carriage.)

Q: Was it the negligence of Cangco?

A: No. the proximate cause was the bulk of watermelon. It

was dimly lighted. There is negligence considering the
person, time and place.

Gutierrez v. Gutierrez (56 Phil 177)

- there were 5 defendants. 3 were held liable. The mother

and child were not held liable.

Q: A obliged himself the following to B: a. to give a

refrigerator, model 123; b. an 18 inch TV set; c. fix piano of
B. A failed to perform any. What are the remedies?

A: Determine first the nature of the thing to be delivered

whether determinate or indeterminate:

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Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2
a. determinate/specific(ref)- specific performance plus
damages.
b. Generic (TV) – to have another person perform at the
expense of the debtor.
c. Service (to do) – damages;involuntary servitude.

Generic – depends on the purpose and circumstances.

July 7, 2007 (7/7/07)

Compliance of Obligation; specific obligation of the debtor;

different kinds of obligation – joint solidary.

July 10 and 28 -make up class

Compliance – determine the kind of obligation; determine

the purpose.

BAR EXAM QUESTION:

There was an obligation on the part of A to deliver mangoes

on july 1, 2006, 6 months after agreement with B. One
month before delivery, A sold to the fruit to X. Can B recover
the fruits from X?

A: No. B has no real rights over the fruits since it was not
delivered to him.

KINDS OF OBLIGATIONS AS TO PERFECTION AND

EXTINGUISHMENT:

Q: promissory note:

1/2/93

I promise to pay B P1M

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Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2
A
What kind of obligation?

A: Pure Obligation
 even if suspensive or postestative condition,
the debtor may be compelled if there is a pre existing
condition.
Impossible Conditions:

If with a term – shall annul condition

If without a term – it is void
If negative impossible – valid condition

Art. 1187. The effects of a conditional obligation to give,

once the condition has been fulfilled, shall retroact to the
day of the constitution of the obligation. Nevertheless, when
the obligation imposes reciprocal prestations upon the
parties, the fruits and interests during the pendency of the
condition shall be deemed to have been mutually
compensated. If the obligation is unilateral, the debtor shall
appropriate the fruits and interests received, unless from
the nature and circumstances of the obligation it should be
inferred that the intention of the person constituting the
same was different.

Reciprocal – sale
Unilateral – donation

Q: A obliged himself to B to deliver a thing on September

2005, after they agreed in January 2003. A however
delivered it to in April of 2003. Who has a better right?
What about C?
A: B has a better right. C will have a better right if he acted
in good faith.
* with regard to improvements, if voluntarily made by the
debtor, no other right than usufructuary.

BAR EXAM QUESTION:

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Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2

Q: A borrowed P1M from B payable at the end of the year; A

delivered a car as stipulated, B may use the car. On August
1, A offered to pay P1M, can B be compelled to accept P1M?

A: It depends on whose benefit the term was constituted. If

for the benefit of both parties, there may be no compulsion.
If for the benefit of the debtor, creditor may be compelled to
accept.

Instances for the benefit of the debtor:

1. on or before
2. Not later than
3. within ___ mos.

Q: A borrowed from B P1M, payable at the end of the year.

August 1, creditor demanded a mortgage constituted on the
house of A. No mortgage was delivered. On Aug.16, can
creditor demand? When?

A: When he loses the right to make use of the period. If

debtor has promised, in this case the debtor did not promise
anything.

Q: If insolvent, will he lose his right?

A: No, if he furnishes a guaranty which is acceptable to the

creditor.

Q: How will he be insolvent?

A: by giving one or more of his property.

Q: What if he has no assets?

A: third person may guarantee.

Art. 1198. The debtor shall lose every right to make use of
the period:

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Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2
(1) When after the obligation has been contracted, he
becomes insolvent, unless he gives a guaranty or security
for the debt;

(2) When he does not furnish to the creditor the guaranties

or securities which he has promised;

(3) When by his own acts he has impaired said guaranties or

securities after their establishment, and when through a
fortuitous event they disappear, unless he immediately
gives new ones equally satisfactory;

(4) When the debtor violates any undertaking, in

consideration of which the creditor agreed to the period;

(5) When the debtor attempts to abscond. (1129a)

Lim v. People (133 SCRA 333)

-> merely an agent; 1197 is not applicable. Period “as soon

as sold”

Millares v. Hernando (151 SCRA 484)

-> 1197 is not applicable.

Art. 1197. If the obligation does not fix a period, but from
its nature and the circumstances it can be inferred that a
period was intended, the courts may fix the duration
thereof.

The courts shall also fix the duration of the period when it
depends upon the will of the debtor.

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Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2
In every case, the courts shall determine such period as
may under the circumstances have been probably
contemplated by the parties. Once fixed by the courts, the
period cannot be changed by them. (1128a)

AS TO PLURALITY OF PRESTATION:

SECTION 3. - Alternative Obligations

Art. 1199. A person alternatively bound by different

prestations shall completely perform one of them.

The creditor cannot be compelled to receive part of one and

part of the other undertaking. (1131)

Art. 1200. The right of choice belongs to the debtor, unless

it has been expressly granted to the creditor.

The debtor shall have no right to choose those prestations

which are impossible, unlawful or which could not have been
the object of the obligation. (1132)

Art. 1201. The choice shall produce no effect except from

the time it has been communicated. (1133)

Art. 1202. The debtor shall lose the right of choice when
among the prestations whereby he is alternatively bound,
only one is practicable. (1134)

Art. 1203. If through the creditor's acts the debtor cannot

make a choice according to the terms of the obligation, the
latter may rescind the contract with damages. (n)

Art. 1204. The creditor shall have a right to indemnity for

damages when, through the fault of the debtor, all the
things which are alternatively the object of the obligation
have been lost, or the compliance of the obligation has
become impossible.

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
The indemnity shall be fixed taking as a basis the value of
the last thing which disappeared, or that of the service
which last became impossible.

Damages other than the value of the last thing or service

may also be awarded. (1135a)

Art. 1205. When the choice has been expressly given to the
creditor, the obligation shall cease to be alternative from the
day when the selection has been communicated to the
debtor.

Until then the responsibility of the debtor shall be governed

by the following rules:

(1) If one of the things is lost through a fortuitous

event, he shall perform the obligation by delivering that
which the creditor should choose from among the
remainder, or that which remains if only one subsists;

(2) If the loss of one of the things occurs through the

fault of the debtor, the creditor may claim any of those
subsisting, or the price of that which, through the fault
of the former, has disappeared, with a right to
damages;

(3) If all the things are lost through the fault of the
debtor, the choice by the creditor shall fall upon the
price of any one of them, also with indemnity for
damages.

The same rules shall be applied to obligations to do or not to

do in case one, some or all of the prestations should become
impossible. (1136a)

Art. 1206. When only one prestation has been agreed upon,
but the obligor may render another in substitution, the
obligation is called facultative.

The loss or deterioration of the thing intended as a

substitute, through the negligence of the obligor, does not

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Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2
render him liable. But once the substitution has been made,
the obligor is liable for the loss of the substitute on account
of his delay, negligence or fraud. (n)

a.) alternative
b.) facultative
c.) conjunctive – 2 or more prestations which shall be
complied with.

Example:

I promise to __,__,and ___ (conjunctive)

I promise to __,__ ,or ___ (alternative)

In conjunctive and facultative, no choice is made.

In alternative, choice is with debtor unless:

Art. 1205. When the choice has been expressly given to the
creditor, the obligation shall cease to be alternative from the
day when the selection has been communicated to the
debtor.

* choice must be communicated. (relevant if one of the

prestation was lost)

1. if fault of debtor after communication – debtor is liable.

2. if loss happened before communication due to fortuitous

event – debtor may still choose from the remaining.

IF FAULT WAS DUE TO ONE OF THE PARTIES; MAKE A

DISTINCTION, WHO HAS AT FAULT AND WHO HAS THE
CHOICE:

1. Choice of debtor; fault of creditor.

- debtor may choose from those remaining or debtor may

opt to rescind the obligation.

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Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2
2. Choice of creditor; fault of debtor.

- creditor may opt to choose from those remaining or that

value of which was lost plus damages.

Example:

Choice of debtor, first prestations were lost due to his fault,

only one is left and yet was lost through fortuitous event.

- debtor can’t be held liable.

In alternative, if all prestations were lost due to the fault of

the debtor?

 depends on who has the right to choose:

1. if debtor: value of last prestation plus damages.

2. if creditor’s choice: anything of those lost plus
damages.

In Facultative: involves 2 or more prestations but only

one is due.

- if one is lost, depends if there was a communication.

Tolentino: if debtor destroys the substitute, it doesn’t

matter.

Q: What if debtor refuses to make a choice?

A: Creditor file an action in the alternative.

Final exams/ midterms

(might be asked)

In July 1, 2003, A and B

entered into an agreement.
When it fell due, B failed to
fulfill and was in delay. (Sir
said that he is not in delay,

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Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2

because there was no

demand.)

Q: When can debtor make

a choice of the substitution?

A: He can make a choice

even before it becomes due
and demandable.

Facultative vs. Penal clause (there should be non-

compliance.)

AS TO THE RIGHTS AND OBLIGATION OF MULTIPLE

PARTIES:

SECTION 4. - Joint and Solidary Obligations

Art. 1207. The concurrence of two or more creditors or of

two or more debtors in one and the same obligation does
not imply that each one of the former has a right to
demand, or that each one of the latter is bound to render,
entire compliance with the prestation. There is a solidary
liability only when the obligation expressly so states, or
when the law or the nature of the obligation requires
solidarity. (1137a)

Art. 1208. If from the law, or the nature or the wording of

the obligations to which the preceding article refers the
contrary does not appear, the credit or debt shall be
presumed to be divided into as many shares as there are
creditors or debtors, the credits or debts being considered
distinct from one another, subject to the Rules of Court
governing the multiplicity of suits. (1138a)

Art. 1209. If the division is impossible, the right of the

creditors may be prejudiced only by their collective acts, and
the debt can be enforced only by proceeding against all the

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Notes in Civil Law Review 2
debtors. If one of the latter should be insolvent, the others
shall not be liable for his share. (1139)

Art. 1210. The indivisibility of an obligation does not

necessarily give rise to solidarity. Nor does solidarity of itself
imply indivisibility. (n)

Art. 1211. Solidarity may exist although the creditors and

the debtors may not be bound in the same manner and by
the same periods and conditions. (1140)

Art. 1212. Each one of the solidary creditors may do

whatever may be useful to the others, but not anything
which may be prejudicial to the latter. (1141a)

Art. 1213. A solidary creditor cannot assign his rights

without the consent of the others. (n)

Art. 1214. The debtor may pay any one of the solidary
creditors; but if any demand, judicial or extrajudicial, has
been made by one of them, payment should be made to
him. (1142a)

Art. 1215. Novation, compensation, confusion or remission

of the debt, made by any of the solidary creditors or with
any of the solidary debtors, shall extinguish the obligation,
without prejudice to the provisions of Article 1219.

The creditor who may have executed any of these acts, as

well as he who collects the debt, shall be liable to the others
for the share in the obligation corresponding to them.
(1143)

Art. 1216. The creditor may proceed against any one of the
solidary debtors or some or all of them simultaneously. The
demand made against one of them shall not be an obstacle
to those which may subsequently be directed against the
others, so long as the debt has not been fully collected.
(1144a)

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Notes in Civil Law Review 2
Art. 1217. Payment made by one of the solidary debtors
extinguishes the obligation. If two or more solidary debtors
offer to pay, the creditor may choose which offer to accept.

He who made the payment may claim from his co-debtors

only the share which corresponds to each, with the interest
for the payment already made. If the payment is made
before the debt is due, no interest for the intervening period
may be demanded.

When one of the solidary debtors cannot, because of his

insolvency, reimburse his share to the debtor paying the
obligation, such share shall be borne by all his co-debtors, in
proportion to the debt of each. (1145a)

Art. 1218. Payment by a solidary debtor shall not entitle him

to reimbursement from his co-debtors if such payment is
made after the obligation has prescribed or become illegal.
(n)

Art. 1219. The remission made by the creditor of the share

which affects one of the solidary debtors does not release
the latter from his responsibility towards the co-debtors, in
case the debt had been totally paid by anyone of them
before the remission was effected. (1146a)

Art. 1220. The remission of the whole obligation, obtained

by one of the solidary debtors, does not entitle him to
reimbursement from his co-debtors. (n)

Art. 1221. If the thing has been lost or if the prestation has
become impossible without the fault of the solidary debtors,
the obligation shall be extinguished.

If there was fault on the part of any one of them, all shall be
responsible to the creditor, for the price and the payment of
damages and interest, without prejudice to their action
against the guilty or negligent debtor.

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Notes in Civil Law Review 2
If through a fortuitous event, the thing is lost or the
performance has become impossible after one of the
solidary debtors has incurred in delay through the judicial or
extrajudicial demand upon him by the creditor, the
provisions of the preceding paragraph shall apply. (1147a)

Art. 1222. A solidary debtor may, in actions filed by the

creditor, avail himself of all defenses which are derived from
the nature of the obligation and of those which are personal
to him, or pertain to his own share. With respect to those
which personally belong to the others, he may avail himself
thereof only as regards that part of the debt for which the
latter are responsible. (1148a)

1. Joint obligation
2. Solidary obligation

In the exams if A, B and C are debtors and X and Y are

creditors, and it speaks of solidarity, presume solidarity on
both sides.

BAR EXAM QUESTION:

Q: A and B obliged themselves to deliver 1thousand pesos

worth of specific sacks of rice to X and Y. What is the type of
obligation?

A: It is a joint obligation unless there is a stipulation; the

law requires it; the nature of the obligation requires it.

Q: B delivered entire 1 thousand pesos to X, can Y compel B

to deliver?

A: Yes. Because the obligation is joint.

Solidary:

1. Joint and several.

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
2. jointly and severally.

Ronquillo v. CA (132 SCRA 274)

“individually and jointly, respectively, collectively and

distinctively.”

In promissory note: I promise to pay A and B (solidary).

We promise to pay. (solidary)

If simple “We” – joint

Solidary liability examples:

LAW

Solution indebiti, crimes, negotiorum gestio. In agency read

b.solidary on the on the outline, 1823-1824-> tortuous act
of one of the parties.

Art. 1823. The partnership is bound to make good the loss:

(1) Where one partner acting within the scope of his

apparent authority receives money or property of a
third person and misapplies it; and

(2) Where the partnership in the course of its business

receives money or property of a third person and the
money or property so received is misapplied by any
partner while it is in the custody of the partnership. (n)

Art. 1824. All partners are liable solidarily with the

partnership for everything chargeable to the partnership
under Articles 1822 and 1823. (n)

NATURE OF THE OBLIGATION WHICH REQUIRES

SOLIDARITY:

Example:

1. Liability arising from human relations. (torts-2194)

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Art. 2194. The responsibility of two or more persons who
are liable for quasi-delict is solidary.

2. Decisions of the Supreme Court which became final.

Liwanag v. WCC

Computations:

Joint obligations

P120

A X

C Y

-> X may demand P60

If X demands from A, A is to pay only P20.

Mixed Solidarity

X may demand 120 from any of them.

What if there was an agreement? A = ½; B = ¼; C =1/4; X

=¾;Y=¼

A: If joint- X with respect to A can demand 45;

Q: If mixed:

A: X= 90; Y = 30; X may demand P22.50 from A.

Passive solidarity:

No agreement – debtors are solidarily bound. X may

demand 60 from A.

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If there is an agreement: X may demand from A- 45, B and
C- 22.50.

Active Solidarity:

Creditor solidarily bound. X can demand from A = 40; if Y

receives 40, he should give 20 to X.

If there is an agreement: X may demand 45 from A and Y

may demand 15 from A.

In a joint obligation if A paid the whole 120, he cannot claim

reimbursement from B and C unless he proves that they
have been benefited. There was payment to the wrong
party.

Solidary:

Q: A demanded payment from X, can Y still collect?

A: No. the payment of one debtor extinguishes the

obligation.

Q: In joint, C became insolvent, how much can X demand

from A?

A: Still P20. Insolvency shall not increase the debt of joint

debtors.

Q: if X remitted entire obligation in favor of A, can Y still

collect from B and C?

A: Yes.

Q: If solidary, C became insolvent, how much can X

demand?

A: 120. The share of 1 solidary debtor shall be shouldered

by other solidary debtors.

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Q: If A was compelled to pay X, how much can A recover?

A: From B=P60

REMISSION IN SOLIDARY:

Q: X condones share of A and demanded payment from B.

How much can B pay?

A: P80

Q: If after condonation C was already insolvent, how much

can B recover from A?

A: Having paid 80, B shall recover 20, even if remitted, it

does not exempt if one is insolvent.

EFFECT OF DISMISSAL OF ACTION

Q: X and Y filed a case against A, however it was dismissed.

Y filed a case again. Will his action prosper?

A: it depends if joint or solidary.

Q: If joint: If reason is prescription, Y still files, may it

prosper?

A: Yes. The debts are separate and distinct in joint. Action

shall not inure to X.

Q: If the ground is subject to different conditions?

A: Yes. The debts are separate and distinct in joint. Action

shall not inure to X.

Q: If ground is minority. May it prosper?

A: No, it is an absolute defense.

Q: If dismissed because contract is void, will it prosper?

A: No.

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Q: if solidary?

A: No. The demand of one creditor inures to the benefit of

other creditors.

BAR EXAMINATION QUESTION:

Q: Four medical students rented an apartment. They agreed

for the payment of utilities. Before the lease contract ended,
3 of the 4 went back to their country. They have unpaid
telephone bills worth 100k, can the one left pay only P25?

A: Yes. It is presumed to be a joint obligation as provided in

Article 1207.

Art. 1207. The concurrence of two or more creditors or of

two or more debtors in one and the same obligation does
not imply that each one of the former has a right to
demand, or that each one of the latter is bound to render,
entire compliance with the prestation. There is a solidary
liability only when the obligation expressly so states, or
when the law or the nature of the obligation requires
solidarity. (1137a)

DISJUNCTIVE

1. A will pay P120 either to X or Y

2. A or B will pay X

Q: If X demands payment, A paid Y, can X still demand

payment from A? Who has the right to choose?

A: Depends on the agreement.

Q: What if there is no agreement?

A: Tolentino- should be treated like solidary. Payment

should be made to the solidary creditor who demanded first.

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* Sir does not agree! Rules on alternative obligation should
govern because under the law solidarity is not presumed
hence disjunctive is not one of it.

NEXT MEETING TUESDAY!

July 24, 2007

BAR EXAM QUESTION:

Q: Corporation promised to deliver furniture set to A. they

agreed that in case of non compliance, a penalty of 100
thousand pesos must be paid. The corporation delivered
furniture set which is different, instead of Narra. Buyer is
asking for 300 thousand pesos as damages and 100
thousand for the penalty. Is this claim tenable?

A: UP Law Center: It is not tenable. The penalty is the

substitute for damages.

Alternative answer: Yes, he may claim for damages because

there was fraud committed.

PENAL CLAUSE – provides for greater liability.

Robes-Francisco v. CFI 86 SCRA 59

The supreme court ruled that the 4% stipulation is not a

penal clause. Even without such stipulation, corporation is
still liable to pay 6% based on Article 2209.

Art. 2209. If the obligation consists in the payment of a sum

of money, and the debtor incurs in delay, the indemnity for
damages, there being no stipulation to the contrary, shall be
the payment of the interest agreed upon, and in the
absence of stipulation, the legal interest, which is six per
cent per annum. (1108)

Bachrach v. Espiritu 52 PHIL 346

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Facts: There was a sale of 2 trucks with interest of 12% for
the unpaid portion and a penalty of 25%.

Held: Parties expressly stipulated the payment of interest

hence liable, the penalty was reduced to 10% because there
was partial performance; usurious.

* no need to present proof of damages as long as there is

breach of the obligation.

Q: May the aggrieved party be able to compel the other

party to pay penalty plus performance?

A: The general rule is they may not, however if it is clearly

granted, they may.

Illustration: A construction of a building which has a penalty

of 10 thousand pesos per day if not completed on the
agreed day, plus performance was agreed upon.

Q: Debtor offered his car instead of paying the penalty. May

a debtor compel creditor to accept penalty instead of car.

A: General rule: No; Exception: Unless expressly reserved.

Q: If the principal is void, will it follow that the accessory is

void?

A: General Rule: Yes

Exception: if the basis is the nullity of the obligation there

can be a penalty.

Example:Foreigners who contracted Filipinos usually penalty

is provided in case contract is declared void. In this case the
nullity of the principal does not affect the penalty.

BREACH OF OBLIGATION:

Q: Who can be held liable?

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A: Those who are enumerated in Article 1170; hence,
anyone.

Art. 1170. Those who in the performance of their obligations

are guilty of fraud, negligence, or delay, and those who in
any manner contravene the tenor thereof, are liable for
damages. (1101)

FRAUD:

1. Fraud in contract – art. 1338

Art. 1338. There is fraud when, through insidious words or

machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he
would not have agreed to. (1269)

2. Causal fraud – dolo causante in contracts; voidable.

3. Incidental fraud – dolo incidente

Art. 1170. Those who in the performance of their obligations

are guilty of fraud, negligence, or delay, and those who in
any manner contravene the tenor thereof, are liable for
damages. (1101)

- if obligation is monetary in character for example, P1M, it

is interest by way of damages.

Compensatory damages – expressly stipulated in writing.

Q: Is article 1170 by way of dolo?

A: No. Better term is bad faith or malice. The phrase “in any
manner” covers not only fraud but also negligence and
delay.

WAIVER of future fraud is void:

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- consider the dated when waiver was made, and date
when the fraudulent act happened.

NEGLIGENCE (memorize)

Art. 1173. The fault or negligence of the obligor consists in

the omission of that diligence which is required by the
nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place.
When negligence shows bad faith, the provisions of Articles
1171 and 2201, paragraph 2, shall apply.

If the law or contract does not state the diligence which is to

be observed in the performance, that which is expected of a
good father of a family shall be required. (1104a)

- depends on the circumstances, time and place.

- Degree of diligence: that of a good father of a family
unless the law or the stipulations provide otherwise.

Q: May a waiver of future negligence be considered void.

A: Yes. Gross negligence is equivalent to fraud.

Telefast v. Castro 158 SCRA 445

The negligence in this case was considered gross in

character.

DELAY:

“Mora”; non-fulfillment with respect to time.

- no delay in obligation not to do. (obviously!)

Effects of delay:

1. If determinate thing to deliver, there was a fortuitous

event – the obligor is still liable.

BAR EXAM QUESTION:

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Q: A and B entered into a lease agreement over certain
machineries. B was to open a car repair shop. On February
15, they agreed that the machineries will be leased for one
month. On March 15, the lessor demanded return of the
machineries. Because the truck of B had a problem, the
machineries were not returned. Is B liable?

A: No, B is not liable. There were only 28 days. An

agreement of 1 month is 30 days.

*As a rule there has to be a demand.

*Demand need not be in writing; It is different from demand

to interrupt the prescriptive period.

Art. 1169. Those obliged to deliver or to do something incur

in delay from the time the obligee judicially or extrajudicially
demands from them the fulfillment of their obligation.

However, the demand by the creditor shall not be necessary

in order that delay may exist:

(1) When the obligation or the law expressly so

declare; or

(2) When from the nature and the circumstances of the

obligation it appears that the designation of the time
when the thing is to be delivered or the service is to be
rendered was a controlling motive for the
establishment of the contract; or

(3) When demand would be useless, as when the

obligor has rendered it beyond his power to perform.

In 1169 – no demand is needed.

1. by law – eg. Payment of tax, agency.

2. Stipulation
3. When period is the controlling motive. Ex. Wedding.
4. Demand would be useless due to the of the debtor.

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In reciprocal obligations, neither party incurs in delay if the
other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. From the
moment one of the parties fulfills his obligation, delay by the
other begins. (1100a)

Reciprocal obligations:

- arise from the same transaction.

Example: Contract of sale.

1169 – should apply only if both are already due and

demandable upon establishment or at the same time.

Agcaoili v. GSIS 165 SCRA 1

- if both in delay, no right of recission.

Art. 1174. Except in cases expressly specified by the law, or

when it is otherwise declared by stipulation, or when the
nature of the obligation requires the assumption of risk, no
person shall be responsible for those events which could not
be foreseen, or which, though foreseen, were inevitable.
(1105a)

- it is the happening of a fortuitous event. It applies to

any kind of obligation.

In obligation to give, Article 1262 applies:

Art. 1262. An obligation which consists in the delivery of a

determinate thing shall be extinguished if it should be lost or
destroyed without the fault of the debtor, and before he has
incurred in delay.

When by law or stipulation, the obligor is liable even for

fortuitous events, the loss of the thing does not extinguish
the obligation, and he shall be responsible for damages. The
same rule applies when the nature of the obligation requires
the assumption of risk. (1182a)

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In Article 1165, even if obligation became impossible due to
Fortuitous event, debtor is still liable.

Art. 1165. When what is to be delivered is a determinate

thing, the creditor, in addition to the right granted him by
Article 1170, may compel the debtor to make the delivery.

If the thing is indeterminate or generic, he may ask that the

obligation be complied with at the expense of the debtor.

If the obligor delays, or has promised to deliver the same

thing to two or more persons who do not have the same
interest, he shall be responsible for any fortuitous event
until he has effected the delivery. (1096)

- promise to deliver to two or more persons, the debtor

is still liable. In Napocor v. CA (161 SCRA 344), to be
excused there should be no concurring negligence.

BAR EXAM QUESTION:

Q: A ring was delivered to a jewelry shop for cleaning. After

a week, the ring was not yet cleaned. Thereafter, the ring
was lost due to robbery. Is the jewelry shop liable?

A: Yes. Before the fortuitous event, the jewelry shop was

already in delay.

REMEDIES FOR BREACH:

A. Extra judicial – principal remedy, expressly granted by

law. - 1191. It can be invoked aside from other remedy.
Art.1381 is only a subsidiary remedy.

Art. 1191. The power to rescind obligations is implied in

reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.

The injured party may choose between the fulfillment and

the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission, even

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after he has chosen fulfillment, if the latter should become
impossible.

The court shall decree the rescission claimed, unless there

be just cause authorizing the fixing of a period.

This is understood to be without prejudice to the rights of

third persons who have acquired the thing, in accordance
with Articles 1385 and 1388 and the Mortgage Law. (1124)

Art. 1381. The following contracts are rescissible:

(1) Those which are entered into by guardians

whenever the wards whom they represent suffer lesion
by more than one-fourth of the value of the things
which are the object thereof;

(2) Those agreed upon in representation of absentees,

if the latter suffer the lesion stated in the preceding
number;

(3) Those undertaken in fraud of creditors when the

latter cannot in any other manner collect the claims
due them;

(4) Those which refer to things under litigation if they

have been entered into by the defendant without the
knowledge and approval of the litigants or of
competent judicial authority;

(5) All other contracts specially declared by law to be

subject to rescission. (1291a)

If court declared the act as rescissory, it will retroact from

the time notice was given to the other party.

Q: Why is there a need to file a rescission with the courts

when it can be extrajudicial?

A: Because a party cannot take the law in his own hands

especially if there is recovery needed.

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UP v. de los Angeles (35 SCRA 102)

- there can be unilateral decision provided it is agreed upon.

BAR EXAMINATION QUESTION

Q: A sold a parcel of land to B for P1M, B paid 100 thousand

as down payment. Vendor will be liable for eviction of
squatters, balance to be paid 30 days after eviction, if
squatters are still there for 6 months buyer should return
the money. During the 6th month period, the price of the
land was doubled. Seller offered to return the 100 thousand
pesos. Buyer refused and offered to pay the balance and
asked seller to sign. Seller filed an action for rescission. Is
the action proper?

A: No. The seller was not the aggrieved party. Rescission as

a remedy maybe invoked only by the aggrieved party.

UFC v. CA (33 SCRA 1)

1. Only those who have complied with their obligation or at

least ready to comply.
2. Violation must be substantial/fundamental in character.

There was no showing that Mafran had exhausted all the

remedies available.

SC: rescission is under 1191 not 1381.

Q: If obligation becomes impossible, what is the remedy?

A: Rescission. If already rescinded, he can no longer

demand for the fulfillment.

Magdalena Estate v. Myrick (71 Phil 344)

Myrick was able to recover because there was no stipulation

as to forfeiture.

Other extrajudicial remedies:

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Rights of unpaid seller:

Art. 1526. Subject to the provisions of this Title,

notwithstanding that the ownership in the goods may have
passed to the buyer, the unpaid seller of goods, as such,
has:

(1) A lien on the goods or right to retain them for the

price while he is in possession of them;

(2) In case of the insolvency of the buyer, a right of

stopping the goods in transitu after he has parted with
the possession of them;

(3) A right of resale as limited by this Title;

(4) A right to rescind the sale as likewise limited by this

Title.

Where the ownership in the goods has not passed to the

buyer, the unpaid seller has, in addition to his other
remedies a right of withholding delivery similar to and
coextensive with his rights of lien and stoppage in transitu
where the ownership has passed to the buyer. (n)

B. Judicial Remedies:

a.) Principal remedies – specific performance

Q: In obligation to do, is substitute performance allowed?

A: It depends. If personal qualification was stipulated.

If no specific performance, it amounts to involuntary

servitude.

Q: If obligation was to do and obligation was poorly done.

A: Art. 1167. If a person obliged to do something fails to do

it, the same shall be executed at his cost.

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This same rule shall be observed if he does it in
contravention of the tenor of the obligation. Furthermore, it
may be decreed that what has been poorly done be undone.
(1098)

b.) Subsidiary remedies

1. accion pauliana – to be discussed in rescissible contracts.

2. accion subrogatoria – creditor may be subrogated to the

right of the debtor as to 3rd persons.

- pertains to obligation to give; monetary obligation. It does

not pertain to purely personal right. Example: acts of
agency.

Q: What is the extent of liability?

A: 2236, applies to present and future property.

Art. 2236. The debtor is liable with all his property, present
and future, for the fulfillment of his obligations, subject to
the exemptions provided by law. (1911a)

- If a person is judicially declared to be insolvent, when

he inherits, the future property is exempt.

Family Home: May be a subject for tax nonpayment,

creditors for construction, claim of laborers and mortgagee.
(Rules of Court rule 39, sec.13)

MODES OF EXTINGUISHMENT – Article 1231

Art. 1231. Obligations are extinguished:

(1) By payment or performance:

(2) By the loss of the thing due:

(3) By the condonation or remission of the debt;

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(4) By the confusion or merger of the rights of creditor
and debtor;

(5) By compensation;

(6) By novation.

Other causes of extinguishment of obligations, such as

annulment, rescission, fulfillment of a resolutory condition,
and prescription, are governed elsewhere in this Code.
(1156a)

- It presupposes that there is an existing valid obligation.

Recission – principal remedy is under article 1191.

Art. 1191. The power to rescind obligations is implied in

reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.

The injured party may choose between the fulfillment and

the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission, even
after he has chosen fulfillment, if the latter should become
impossible.

The court shall decree the rescission claimed, unless there

be just cause authorizing the fixing of a period.

This is understood to be without prejudice to the rights of

third persons who have acquired the thing, in accordance
with Articles 1385 and 1388 and the Mortgage Law. (1124)

Extinctive prescription – conversion of civil to natural.

Q: Are thes modes exclusive?

A: No! In Saura v. DBP, there was a mutual dissent. This

also considered as a mode. The Supreme Court said that

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there was a perfected consensual contract of loan.
(mutuum)Q: Aside from it, what are the other modes?

A: Death - To the extent of personal obligation to do. It does

not extinguish property rights. Eg. Agency – death of an
agent; Partnership – death of a partner.

Q: Fulfillment of resolutory condition in 1231 pertains to?

A: Happening of a resolutory condition.

- will of one of the parties in contracts as a general rule

does not extinguish obligation.
- Exception: contracts involving trust and confidence.
Partnership without prejudice to the possible liability of
partner causing dissolution.

Q: Is happening of a fortuitous event a mode of

extinguishment?

A: Fortuitous events are not modes of extinguishment. Only

results to loss of the thing due.

- Insolvency per se is not a mode of extinguishment,

there must be a judicial declaration.

Q: What about renunciation by the creditor?

A: Not necessarily. If it is gratuitous, it would fall under

condonation/remission. If for a consideration, it falls under
novation.

Q: Compromise?

A: It may. But it would fall under one of those mentioned by

law; common result reduction of obligation which falls under
condonation; if it would fall under a totally new obligation, it
is novation.

1. PAYMENT

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- synonymous with performance.
- May apply to all kinds of obligation.

Rules:

a.) As to person who pays.

b.) As to whom payment is made.
c.) Prestation in obligation.
d.) Date, time and place.

a.) person who pays.

- Should be called payor, not only debtor, because third

persons may pay.
- Not every person under the NCC can compel a person
to pay except those who have an interest and those
who by virtue of stipulation.

Eg. A is indebted to B. X is a 3rd person.

Q: Who are those who have interest?

A: Joint debtors have interest in the fulfillment of the entire

obligation, those who are subsidiary liable. (guarantors,
mortgagors, pledgors.)

Q: If a third person pays, if he has interest, what happens?

A: Subrogation.

- If X is a guarantor, Y is a mortgagor who secured debt,

Y pays, he shall be subrogated to the rights of B and
can exercise right of a creditor.
- if X pays B, obligation of A to B is extinguished but
accessory obligations are not extinguished. It subsists
that is why X can still foreclose the mortgage.

Q: A is indebted to B. X pays 100 thousand to B for A’s debt.

Does A have a right to recover from A and can he have a
right of foreclosure?

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A: It depends. If A consented, he has the right.

Q: If before X pays, A partially paid 20 thousand, X paid

entire 100 thousand, how much can Y ask for
reimbursement?

A: Only 80 thousand, that which redounded to the benefit of

A.

Q: If X pays without the knowledge of A, can he compel A to

pay?

A: No. He is not subrogated to the rights of B, hence he

cannot foreclose the mortgage.

“consented” – means debtor failed to object at a reasonable

time.

Q: X had agreement with B without knowledge of A, can he

recover the payment made?

A: As long as payment was without knowledge, third person

shall not be subrogated to the rights of the creditor. (1236-
1237)

Art. 1236. The creditor is not bound to accept payment or

performance by a third person who has no interest in the
fulfillment of the obligation, unless there is a stipulation to
the contrary.

Whoever pays for another may demand from the debtor

what he has paid, except that if he paid without the
knowledge or against the will of the debtor, he can recover
only insofar as the payment has been beneficial to the
debtor. (1158a)

Art. 1237. Whoever pays on behalf of the debtor without the

knowledge or against the will of the latter, cannot compel
the creditor to subrogate him in his rights, such as those
arising from a mortgage, guaranty, or penalty. (1159a)

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Q: X paid B without any intention of being reimbursed. What
if X demanded the return after one week?

A: Indirect Donation. As far as payment, it is valid and

binding.

- Payor must have the capacity to alienate the thing or has

free disposal.

b.) as to the person to whom payment is made.

- called payee; normally the creditor.

CASE: Arañas v. Tutaan

- creditor does not have to be a party. A creditor may be

any person who has the right to compel the
performance.

Eg. A is indebted to B. But the real payment should be given

to Y; even if A pays B, Y can still compel A to pay.

- there is also payment to a person authorize to receive

payment; the law may provide. Eg. Payment to a
sheriff, executors and administrators.

Q: May payment to a wrong person extinguish obligation?

A: Gen. rule: No! Except: 1. if payment redounded to the

benefit of B. Otherwise, obligation is not extinguished.

Q: Who has the burden to prove?

A: No need to prove if: 1. it was ratified by the creditor; 2.

principle of estoppel; 3. if the person to whom payment
made acquired rights of creditor after the payment.

Q: Are there any more exceptions?

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A: Yes. If payment was made in good faith to a person in
possession of the credit, not a mere possession of the
instrument.

Q: X (in possession of PN) demanded payment from A when

the promissory note became due and demandable, A paid x
in good faith.

A: Obligation is extinguished.

Q: A is indebted to B. However, B dies and is survived by Y.

Even if A paid Y, can it be invalidated?

A: Yes. If the payment was not made in good faith, such as

when there is a pending action to declare Y incapacitated.

Q: A is indebted to B. B assigned the credit to X. May it

extinguish the assignment?

A: Yes.

c.)Prestation in obligation

- identity of the obligation; consider the purpose.

General Rule: A partial performance is non-compliance.

Except:

1. The parties expressly stipulate. - Subject to different

terms – integrity of the prestation. Rescission is not a
remedy if there is substantial performance.

Case: JM Tuason v. Javier

A obligated himself to deliver 100 sacks to B for 1000 pesos.

He only delivered 95.

Q: How much can he recover?

A: Amount or value delivered, less damages.

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Notes in Civil Law Review 2
As to kind of obligation:

Q: A is obliged to B. He paid Japanese yen. Is it valid?

A: Yes. RA 8183. Payment may be made in any currency as

long as stipulated. Before: RA 529-payment not in Philippine
currency is prohibited.

Q: Can creditor be compelled to accept check?

A: No. As stated in New pacific timber v. Señeris. Creditor

may refuse to accept check.

Before: If Manager or Cashier’s check, it is deemed as cash.

Q: If partly check and partly cash?

A: Creditor may refuse. Except if stipulated. In Article 1249,

it is extinguished if encashed.

Art. 1249. The payment of debts in money shall be made in

the currency stipulated, and if it is not possible to deliver
such currency, then in the currency which is legal tender in
the Philippines.

The delivery of promissory notes payable to order, or bills of

exchange or other mercantile documents shall produce the
effect of payment only when they have been cashed, or
when through the fault of the creditor they have been
impaired.

In the meantime, the action derived from the original

obligation shall be held in the abeyance. (1170)

Q: If check is stale, will the obligation be extinguished?

A: No.

Q: When is payment thru check extinguish obligation?

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A: When it is encashed or through fault of the debtor when it
had been impaired.

Q: B owes A 1M in 1968. A claimed that in 1968, the value

of 1M is only 500k compared to the present because of
devaluation, hence he claimed 2M base on Art.1250.

Art. 1250. In case an extraordinary inflation or deflation of

the currency stipulated should supervene, the value of the
currency at the time of the establishment of the obligation
shall be the basis of payment, unless there is an agreement
to the contrary. (n)

Is his contention correct?

A: No. As decided in the Philippine Pipe Foundry case, the

supreme court said “as far as Philippine experience is
concerned, there has never been an extraordinary inflation
as experienced by Germany in 1920-1923. Art.1250 may
only be invoked if the source is a contract. In Velasco v.
Meralco, Article 1250 may not be invoked because the
source is a quasi delict.”

d.)date, time, place

Determinate – place where obligation was constituted.

Generic – domicile of the debtor.

SPECIAL FORMS OF PAYMENT

1. Payment by Cession and decion en pago.

Art. 1255. The debtor may cede or assign his property to his
creditors in payment of his debts. This cession, unless there
is stipulation to the contrary, shall only release the debtor
from responsibility for the net proceeds of the thing
assigned. The agreements which, on the effect of the
cession, are made between the debtor and his creditors shall
be governed by special laws. (1175a)

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Notes in Civil Law Review 2
 conventional assignment

 requires consent of both parties.

CASE: Filinvest v. Philippine Acetylene

- no dation en pago, the delivery of the case was not

consented to.
- Filinvest was only an agent; there was no transfer of ownership.

Dacion en Cession
pago
As to transfer
of
ownership:

The delivery No transfer

results to the of ownership,
transfer of creditor only
ownership, given the
same is true power to sell.
with
application of
payment.

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As to effect General Rule:
of payment: Extinguish
only as to the
General rule: extent of the
Extinguished proceeds of
only as to the sale of
the extent of creditor.
value
delivered. Exception:
Unless there
Exception: is an express
unless agreement.
stipulated
upon that
anything
delivered
shall extend
the entire
obligation.Ge
neral Rule:
governed by
law on sales
only if the
pre- existing
obligation is
in money.

Art. 1245.
Dation in
payment,
whereby
property is
alienated to
the creditor
in
satisfaction
of a debt in
money, shall
be governed

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by the law of
sales. (n)

Q: If A is to deliver a carabao, but instead gave a

refrigerator. Is it dacion en pago on sale?

A: No. It is novation. The pre-existing obligation is not in

money.

CASE: Citizens Surety v. CA

- no dation en pago if at the time of the transaction

there is no obligation.

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Notes in Civil Law Review 2
- All transactions were executed within one day. The
indemnity agreement that they will be liable upon
default on payment of surety bond, hence no obligation
yet on that day.
- SC: Dation en pago may pertain to delivery of
rights/things.

2. Application of payments:

Problem: X is the creditor. A owes him, 100k, 50k, 20k and

10k.

Rules:

1. debtor ha the right to designate to which payment is to

be applied.

a.) no partial payment.

b.) to that which is due and demandable, except if payment

was made for the benefit of the debtor.

c.) If the debt is interest bearing.

2.) if debtor fails to designate, the creditor may designate.

3.) if both failed to designate:

Note: provision for application of payment is not applicable

here.

3. that which is most onerous.

4. Proportionate application (provided, it is of the same
nature and burden) – if the debts are of different
amounts.

Q: How do we determine what is the most onerous?

A: There is no hard and fast rule. We must consider factors

and circumstances.

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3. Payment by cession:

1255: voluntary assignment requires consent of the creditor.

Art. 1255. The debtor may cede or assign his property to his
creditors in payment of his debts. This cession, unless there
is stipulation to the contrary, shall only release the debtor
from responsibility for the net proceeds of the thing
assigned. The agreements which, on the effect of the
cession, are made between the debtor and his creditors shall
be governed by special laws. (1175a)

Q: How will the proceeds of the sale be applied?

A: 1. based on stipulation. 2. without agreement; rules in

concurrence and preference of credits shall be applied.

- debtor must deliver his property to creditor.

- Resorted to by debtor who is experiencing financial
difficulty.

4. Tender of payment and consignation:

- tender of payment alone shall never extinguish the

obligation.
- Actual offering of the amount or thing.

1256 – the only one scenario when tender of payment

should be made, when creditor refuses to accept without
just cause.

Art. 1256. If the creditor to whom tender of payment has

been made refuses without just cause to accept it, the
debtor shall be released from responsibility by the
consignation of the thing or sum due.

Consignation alone shall produce the same effect in the

following cases:

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(1) When the creditor is absent or unknown, or does
not appear at the place of payment;

(2) When he is incapacitated to receive the payment at

the time it is due;

(3) When, without just cause, he refuses to give a

receipt;

(4) When two or more persons claim the same right to

collect;

(5) When the title of the obligation has been lost.

(1176a)

CASE: Soco v. Militante:

Q: When may Tender of payment be made judicial?

A: No. Tender of payment by its nature is extra judicial.

Illustration:

Q: There was a sale with right to repurchase. Seller a retro

refuses to accept money, an action was filed. Plaintiff said
that he is not obliged because there is no tender of payment
required. Is his contention correct?

A: Yes. No tender of payment is required. No consignation

is required in sale with right to repurchase.

Q: Is notice required by consignation?

A: Yes.

Q: 2nd notice after consignation is required?

A: Yes. Required but it does not need to come from the

debtor, it is in the form of summons.

Soco v. militante – 2 notices per amount due.

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Notes in Civil Law Review 2
Q: When will obligation be extinguished?

A: When creditor accepted, even if debtor refuses, may

extinguish after consignation, it retroacts from the time of
delivery.

Q: The obligation was due in January, 1998. There was a

tender of payment in January 1, 2000 but was refused. In
January 2, 2004, there was consignation. In January 2, 2007
there was a court ruling. Is the debtor liable to pay interest?

A: Yes. If from January 1998 he was already in delay, up to

consignation if court ruled to be valid. If the consignation
was ruled by the court to be invalid, the interest must be
from January 1998 till court ruled.

According to Sir: however, mora accipiendi.-delay of the

creditor to accept. Debtor may release himself from the
obligation by the consignation of the thing.

Q: Can debtor withdraw the consignated money?

A: Yes. If the withdrawal is made before acceptance of

creditor and before court ruled on the consignation.

- if creditor accepted and court ruled, no withdrawal. If

no ruling yet, it may be withdrawn if creditor accepted.
- Revival without consent of accessory – creditor is
released.

LOSS

When not valid?

- when it goes out of commerce.

- Prohibited by law.
- Impossibility of performance.

Q: To deliver shabu? Is the obligation extinguished?

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A: No. This is not a valid obligation therefore no
extinguishment.

Q: If the thing is lost, who has the burden to prove?

A: depends on who is in possession of the thing at the time

of the loss. However, this rule is not absolute when the loss
occurred during the happening of a calamity, like typhoon.

Read: Art 1265 and Art 1262.

Art. 1265. Whenever the thing is lost in the possession of

the debtor, it shall be presumed that the loss was due to his
fault, unless there is proof to the contrary, and without
prejudice to the provisions of article 1165. This presumption
does not apply in case of earthquake, flood, storm, or other
natural calamity. (1183a)

Art. 1262. An obligation which consists in the delivery of a

determinate thing shall be extinguished if it should be lost or
destroyed without the fault of the debtor, and before he has
incurred in delay.

When by law or stipulation, the obligor is liable even for

fortuitous events, the loss of the thing does not extinguish
the obligation, and he shall be responsible for damages. The
same rule applies when the nature of the obligation requires
the assumption of risk. (1182a)

Q: In an agreement between A and B for construction of

house, proceeds shall be equally distributed from the sale. B
didn’t give his share in the house because of the high price
of materials. A filed an action. May court grant the action?

A: No. Because the event of increase of price is foreseen.

1267 is not applicable.

CASE: Occeña v. Jacobsen

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Notes in Civil Law Review 2
- court can’t change agreement of the parties.

1267 – only difficulty not impossibility.

Art. 1267. When the service has become so difficult as to be

manifestly beyond the contemplation of the parties, the
obligor may also be released therefrom, in whole or in part.
(n)

1264 – depends on the intention of the parties.

Art. 1264. The courts shall determine whether, under the

circumstances, the partial loss of the object of the obligation
is so important as to extinguish the obligation. (n)

CONDONATION OR REMISSION

“donation of a credit”

1272 – refers to “private document only” . If public

document, it needs many copies.

Art. 1270. Condonation or remission is essentially

gratuitous, and requires the acceptance by the obligor. It
may be made expressly or impliedly.

One and the other kind shall be subject to the rules which
govern inofficious donations. Express condonation shall,
furthermore, comply with the forms of donation. (1187)

Art. 1271. The delivery of a private document evidencing a

credit, made voluntarily by the creditor to the debtor,
implies the renunciation of the action which the former had
against the latter.

If in order to nullify this waiver it should be claimed to be

inofficious, the debtor and his heirs may uphold it by
proving that the delivery of the document was made in
virtue of payment of the debt. (1188)

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Notes in Civil Law Review 2
Art. 1272. Whenever the private document in which the debt
appears is found in the possession of the debtor, it shall be
presumed that the creditor delivered it voluntarily, unless
the contrary is proved. (1189)

Q: X owes A 1M, he lends the same amount to A. Is there

condonation?

A: Maybe, if payment of interest is remitted.

Q: If employment of interest is found in debtor X? Is it

condonation?

A: No.

Q: If employment of interest is found in debtor’s possession,

is there necessarily condonation?

A: No, may be through other modes, like payment.

Q: A is the creditor of 100k to B. X, a third party, pledged

his car to B. May the pledged car be used as condonation?

A: Determine first the status of X. Whether he is the owner

or for what the pledge is for.

Then state the accessory v. principal. Not X. Because A and

B are the parties in the principal obligation; there is only a
presumption of X on part of the accessory obligation of the
pledge.

CONFUSION OR MERGER OF RIGHTS

Art. 1275. The obligation is extinguished from the time the

characters of creditor and debtor are merged in the same
person. (1192a)

Q: May it be made through agreement of parties?

A: May be. It depends upon the intention. Ex. Merger of

rights of a corporation.

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Notes in Civil Law Review 2
Q: By operation of law, can there be confusion?

A: By succession, creditor died, debtor is son or daughter.

Q: debtor died, creditor is an heir, can confusion take place?

A: there can be, when there is acceptance.

Q: A is indebted to B. The debt is secured by a mortgage by

M on B. Can there be a confusion of B and M?

A: No.

Q: If there is an agreement?

A: No. It will be subrogation. If B assigned his rights to M,

but still obligation is not extinguished.

Q: Will confusion result in total extinguishment?

A: No. In cases of joint obligations, in 1277.

Art. 1277. Confusion does not extinguish a joint obligation

except as regards the share corresponding to the creditor or
debtor in whom the two characters concur. (1194)

COMPENSATION

Q: If 2 or ore persons are debtors and creditors, will there

be compensation?

A: No, the requirements must be complied with. – Art. 1279

Art. 1279. In order that compensation may be proper, it is

necessary:

(1) That each one of the obligors be bound principally,

and that he be at the same time a principal creditor of
the other;

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(2) That both debts consist in a sum of money, or if the
things due are consumable, they be of the same kind,
and also of the same quality if the latter has been
stated;

(3) That the two debts be due;

(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or

controversy, commenced by third persons and
communicated in due time to the debtor. (1196)

Q: In compensation, is it a reciprocal obligation?

A: Not necessarily.

Q: When is it a reciprocal obligation?

A: Reciprocal obligations arise from a single transaction;

contract of sale.

Q: What about legal compensation? Will it take place in

reciprocal obligations?

A: Not necessarily. In reciprocal obligations, there can be

none.

Q: In partial compensation, is debt totally extinguished?

A: No. Extinguished as to at least one debt.

Q: In compensation, how many debts are involved?

A: 2 or more debts.

Q: Which debts will be extinguished?

A: Less onerous amount.

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Q: A owes B the following, 50k, 100k, 75k, 225k, 100k. B
owes A 100k. How many of the debts will be totally
extinguished?

A: 2 debts of A and debt of B.

Q: A paid 100k to B. A has the following debts to B; 50k,

25k, 10k. How many debts are extinguished?

A: 3 debts are extinguished. Partial compensation because

there is still a balance.

Q: How many kinds of compensation are there?

A: 4: legal, conventional, facultative, judicial.

Q: In some books, there are three; facultative is removed,

why?

A: It is a modification only of conventional.

Q: What are the other names of compensation?

A: set off or counterclaim.

Q: Not really the same because?

A: Set-off and counterclaim must be invoked in courts of

law.

Q: What distinguishes legal from conventional?

A: As to requirements, not the same. In legal, all

requirements should be present, in conventional, not
necessary that all requirements are present. i.e. different
amounts or objects; one debt is not yet due.

Q: Give an example of facultative.

A: Support. Invoked by the one who claims for support.

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Q: A opened a checking account with a bank, he borrowed
money with the same bank. A failed to pay, Bank invoked
compensation. A said that his checking account is
depositum. Is his claim tenable?

A: No. In a checking account, the bank is the creditor, A is a

debtor governed by mutuum, hence compensation can’t take
place.

Q: When is there a deposit?

A: If the delivery is only for safe keeping.

Q: Other kind of facultative.

A: In case of commodatum, bailor can invoke. In a civil

case/penal, invoke by injured party.

CASE: PNB v. Acero

PNB invoked: No legal compensation, the credit line was

used, lawyer of PNB claimed that credit line was shown to
Acero.

- you don’t prove a fact by showing it to the other party.

Q: A is indebted to B with G as guarantor. Can G invoke

compensation?

A: No. they are not debtors and creditors to each other. The
law requires that they are principally bound.

CASE: Sycip V. CA

SC: debtors and creditors should be debtors and creditors in

their own rights.

CASE: Francia v. IAC

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SC: There is no compensation when Francia paid real
property tax to the LG of Pasay. The national government
was the one who expropriated.

- compensation takes place if debt became due at the

same time.

Q: Monetary debts must arise from contracts?

A: Not necessarily. Eg. Attorneys fees

Q: Are all monetary debts subject to compensation?

A: No. Custom duties. (Francia v. IAC)

CASE: International Corp. Bank v. IAC

Facts: Villanueva applied a loan from ICB for 50M. Only 1M

was delivered by the bank. The loan was secured by a
mortgage, which is 110 M asset. Villanueva deposited 1M to
ICB. He invoked compensation.

SC: Since there was a question on the foreclosure sale,

there was no legal compensation.

CASE: Solinap v. del Rosario

Facts: The lessee did not pay rentals. He invoked that the
lessor had made advancements.

SC: No legal compensation because alleged debt were being

questioned in the estate proceedings.

- no legal compensation if debts arise from depositum,

commodatum, civil liability arising from crime.

Q: A is the creditor of B worth 100k secured by a mortgage.

B gave 50k. If there is a partial compensation, will the
mortgage be extinguished?

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A: Not necessarily. It depends which debt is most onerous.

Q: If there is total compensation, will the mortgage be

extinguished?

A: Yes. Mortgage will be extinguished.

Q: B is indebted to A for 100k which is interest bearing. B

gave 50 k to A. Will there be payment of interest even after
payment of compensation?

A: Depends. If there is total compensation, no interest will

be paid. If partial, depends on whose debt is bigger.

Q: Will partial compensation be extinguished by

prescription?

A: Yes. Partial compensation does not toll the running of the

period.

ASSIGNMENT OF THE CREDIT

Q: On January 1, 2002, A owes B 100k. B assigned the

credit to C on June 1, 2002. Can C demand payment from
A?

A: Determine when the assignment was made; if made after

both obligation was due and demandable, there will already
be compensation.

Q: What if A paid B 50k in May 1, 2002? How much can C

claim?

A: 50k. He must ask B for the other 50k.

Q: In the same case, the debt is demandable on May 1,

2002. The credit was assigned to on March 1, 2002. May D
validly demand it on the same date?

A: No. The obligation is not yet due.

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Q: A owes B 100k due and demandable on May 1, 2003. B
assigned it to X on April 1, 2003. A made the following
payments to B: 20k-March 1, 2003; 30K-June 1, 2003; 40k-
decemeber 1, 2003. On May 1, 2003, how much may X
validly demand?

A: It depends: If A had knowledge of assignment of X and

he consented with reservation, X may claim 90k, if he
consented without reservation, 100k. If it was without
knowledge of A, X may claim 10k.

NOVATION

I. Subjective/Personal
II. Objective/Real
III. Mixed

Art. 1291. Obligations may be modified by:

(1) Changing their object or principal conditions;

(2) Substituting the person of the debtor;

(3) Subrogating a third person in the rights of the

creditor. (1203.)

I. Subjective:

A. Active – third person is subrogated in the rights of the

creditor.

B. Passive – substitution of the person of the debtor.

* other classifications:

1. express or implied.

2. extinctive.

3. modificatory.

Eg. Prescription

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Q: In ACTIVE SUBJECTIVE, operative word is subrogated.
When does this happen?

A: 1. by agreement (express);

2. art. 1302 – legal subrogation.

a. Third Party pays creditor without consent of debtor.

b. TP who has an interest pays creditor with or without

consent of debtor.

c. Creditor of debtor pays creditor of the same debtor.

Art. 1302. It is presumed that there is legal subrogation:

(1) When a creditor pays another creditor who is

preferred, even without the debtor's knowledge;

(2) When a third person, not interested in the

obligation, pays with the express or tacit approval of
the debtor;

(3) When, even without the knowledge of the debtor, a

person interested in the fulfillment of the obligation
pays, without prejudice to the effects of confusion as to
the latter's share. (1210a)

Q: In PASSIVE SUBJECTIVE, operative word is substitution.

When does this happen?

A: 1. Expromission – substitution was made without

knowledge or against will of original debtor.

2. delegacion – substitution was made with knowledge of

debtor.

Q: A is indebted to B. A mortgaged to B his property worth

100k. B is indebted to C, 100k also. If A does not pay, can C
foreclose the mortgage?

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A: No. He was not subrogated.

DELEGACION – there is already subrogation, therefore, C

may foreclose the mortgage.

 if there is already novation through

delegacion, no consent of original debtor is
void.
 If payment consented to by A, no novation,
subrogation. (1236-1237)

Art. 1236. The creditor is not bound to accept payment or

performance by a third person who has no interest in the
fulfillment of the obligation, unless there is a stipulation to
the contrary.

Whoever pays for another may demand from the debtor

what he has paid, except that if he paid without the
knowledge or against the will of the debtor, he can recover
only insofar as the payment has been beneficial to the
debtor. (1158a)

Art. 1237. Whoever pays on behalf of the debtor without the

knowledge or against the will of the latter, cannot compel
the creditor to subrogate him in his rights, such as those
arising from a mortgage, guaranty, or penalty. (1159a)

Effect of Insolvency of new debtor:

- If C becomes insolvent after substitution, A is no longer

liable.
- If C was already insolvent at the time of substitution, A
can’t be held liable if no knowledge except if he acted
in Bad Faith or such insolvency is of public knowledge.

II. Objective

A. Change in object – no problem, eg. Money to celphone

(art.1245)

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Art. 1245. Dation in payment, whereby property is alienated
to the creditor in satisfaction of a debt in money, shall be
governed by the law of sales. (n)

B. Change in principal obligation:

a. express
b. implied

* if 2 obligations can’t stand together, there is novation,

there is incompatibility.

* there was novation in FOA and the Villar case.

There was a lease contract entered into for 5 years. Another

contract was entered into for 10 years. The contention is
that the 2nd agreement is void, therefore novation is void.

CASE: Ronquillo v. CA

Facts: The obligation was due in 1952, In 1967, debtor

acknowledge debt and promised to pay. Since it is now
transformed to a natural obligation, will the action for
novation prosper?

SC: Even natural obligations may be subject of novation.

Q: X is the creditor of A, B and C for 10M. After 3 months, C

paid 10M to X without the knowledge of A and B. After 6
months A and B paid 7M to X. May A and B recover the 7M
from X?

A: if voluntarily given, the creditor can retain.

According to sir: It is actually a payment by mistake

therefore solution indebiti.

 In natural obligations, payor knows he can’t

be compelled to pay but nonetheless pays.

II. CONTRACTS

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- while all contracts are agreements, not all agreements
are contracts.

Prohibited:

- Auto contracts – a person contracts himself.

- article 1491.

Art. 1491. The following persons cannot acquire by

purchase, even at a public or judicial auction, either in
person or through the mediation of another:
(1) The guardian, the property of the person or
persons who may be under his guardianship;

(2) Agents, the property whose administration or sale

may have been entrusted to them, unless the consent
of the principal has been given;

(3) Executors and administrators, the property of the

estate under administration;

(4) Public officers and employees, the property of the

State or of any subdivision thereof, or of any
government-owned or controlled corporation, or
institution, the administration of which has been
intrusted to them; this provision shall apply to judges
and government experts who, in any manner
whatsoever, take part in the sale;

(5) Justices, judges, prosecuting attorneys, clerks of

superior and inferior courts, and other officers and
employees connected with the administration of
justice, the property and rights in litigation or levied
upon an execution before the court within whose
jurisdiction or territory they exercise their respective
functions; this prohibition includes the act of acquiring
by assignment and shall apply to lawyers, with respect
to the property and rights which may be the object of
any litigation in which they may take part by virtue of
their profession.

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(6) Any others specially disqualified by law. (1459a)

ELEMENTS OF A CONTRACT:

Natural – implied warranties.

Essential – Consent, Object, Consideration

Accidental – payment of interest. (compensatory)

CHARACTERISTICS:

1. Autonomy – freedom of contract/liberty of contract.

Art. 1306. The contracting parties may establish such

stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law,
morals, good customs, public order, or public policy.
(1255a)

Void waiver:

Example:

a. for agent to waive accounting.

b. pactum commisorium

c. partnership, exclusive partner from sharing profits –

pactum aliena

mortgage – pactum aliendro

d. Public policy:

CASE: Cui v. Arellano

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- scholarship in law school must not be contrary to public
policy.

CASE: Saura v. Sandico

- Escalation clause – ex. Construction contracts. Creditor

has right to demand a higher compensation upon the
happening of a contingency. Ex. Contract of loan
(interest).
- Acceleration clause – stipulation whereby in an
obligation to pay on installment, balance shall
automatically become due and demandable when
debtor fails to pay.

Q: Will an escalation clause be valid when there is no

descalation clause?

A: It is relevant only in contracts of loan; only effect of

circular issued by the Central Bank provided the escalation
clause only happens once a year.

2. Consensuality:

Art. 1306. The contracting parties may establish such

stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law,
morals, good customs, public order, or public policy.
(1255a)

CASE: Republic v. PLDT

- to compel PLDT to enter into inter- connection

agreements is actually expropriation.

Validity of contracts of adhesion:

CASE: Ong Yu v. CA

- plaintiff bought ticket from PAL, eventually he lost his

baggage. In the ticket it contained a waiver of a right.

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SC: waiver of a right in a contract of adhesion are not
considered gladly by the Supreme Court.

3. Mutuality: goes to validity and compliance.

Art. 1308. The contract must bind both contracting parties;

its validity or compliance cannot be left to the will of one of
them. (1256a)

 termination by mere notice – valid.

4.Obligatory:

Art. 1315. Contracts are perfected by mere consent, and

from that moment the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to
all the consequences which, according to their nature, may
be in keeping with good faith, usage and law. (1258)

Q: When is a contract obligatory?

A: Upon perfection of the contract.

Q: When is a contract perfected?

A: It depends if it is consensual (concurrence between the

offer and acceptance), real (like deposit, pledge,
commodatum requires delivery), formal/solemn (requires
compliance with certain formalities prescribed by law).

5. Relativity:

Art. 1311. Contracts take effect only between the parties,

their assigns and heirs, except in case where the rights and
obligations arising from the contract are not transmissible
by their nature, or by stipulation or by provision of law. The
heir is not liable beyond the value of the property he
received from the decedent.

If a contract should contain some stipulation in favor of a

third person, he may demand its fulfillment provided he

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communicated his acceptance to the obligor before its
revocation. A mere incidental benefit or interest of a person
is not sufficient. The contracting parties must have clearly
and deliberately conferred a favor upon a third person.
(1257a)

General rule: Contracts take effect only between parties,

their assigns and heirs.

Exceptions:

1. creation of real rights

Q: A mortgaged his land to B and eventually A

sold it to C. Can C be bound by the mortgage?

A: Yes.

2. Interference by a third party.

Art. 1314. Any third person who induces another to violate

his contract shall be liable for damages to the other
contracting party. (n)

Requisites:

- existence of a valid contract

- knowledge of contract by third persons
- interference by third persons without legal justification
or excuse.

Q: A has a contract with GMA. Subsequently, A entered a

contract with ABS-CBN. A was in bad faith. May ABS CBN be
liable?

A: No. To be liable there must be malice impugned. Third

Party liability does not impugn liability of debtor who
violated.

3. Contracts in fraud of creditors:

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Q: A is the debtor of B. A sold his property to C. May B

rescind the contract between A and C?

A: Yes.

4. Stipulation pour atrui – stipulation in favor of third

persons. It is not the main agreement.

CASE: Kaufman v. PNB

CASE: Florentino v. Encarnacion

- acceptance may be implied.

CASE: Bonifacio bros. v. Mira

- enforcement of insurance.

CLASSIFICATION OF CONTRACTS:

A: Degree of Dependence
1) principal (agency, partnership)
2) accessory (Real Estate Mortgage, Chattel Morgtage,
Pledge, Antichresis)
example: crop loan scenario

B. As to Perfection
1) Real (Pledge, Commodatum, Mutuum.
Deposit)
2) Formal (antichresis; donation)
C. Purpose
D. As to cause
1) onerous
2) pure beneficience

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a) gratuitous
b) lucrative
»liberality id the consideration
3) remuneratory
» seller (payment); buyer (deliver)
E. Risk of Fulfillment
1) Aleatory
» sale of hope – emptio spei
» risk of fulfillment
» insurance
»life annuity
2) commutative
F. Name and Designation
1) Nominate
2) innominate
G. As to subject matter
1) Things
2) Right
3) Services

PAQIII/Oct2007

III. SALES
- there must be an agreement to transfer ownership.

Q: A sold goods to B for purpose of resale, Y bought goods

from X for personal consumption. What law shall govern this
contract?

A: NCC and Code of Commerce,

A-B commercial sale
Y-X civil sale

»now no distinction, NCC governs

Characteristics:

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1. principal
2. bilateral-imposes obligations on two parties
3. nominate
4. onerous- always! otherwise donation
5. commutative- emptio spei

Subject matter:
» things and rights, service is not included

As to object:
a. movable
b. immoxable

Concepts involve:
a) Recto Law- personal prop by installment
b) Maceda- immovable
c) double sale
d) Statute of Frauds

Q: As to WON tangible/intangible?

A: corporeal (things); incorporeal

(rights)
Q: relevant as to what concept?

A: delivery

Q: As to validity?

A: void, unenforceable, rescissible, voidable

Q: 1458 2nd par: provides for?

A: absolute/conditional sale:
» In an absolute sale there is an automatic transfer of
ownership while in conditional sale, there is a reservation of
ownership.

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Art. 1458. By the contract of sale one of the contracting
parties obligates himself to transfer the ownership and to
deliver a determinate thing, and the other to pay therefor a
price certain in money or its equivalent.

A contract of sale may be absolute or conditional. (1445a)

Q: Conditional sale vs. contract to sell

A: In conditional sale, ownership depends on the happening

of condition and it take place by operation of law. In
contract to sell, ownership passes after full payment passes.
There is no automatic transfer, buyer have right to ask
execute final deed.

Q: A delivered receipt to B “as partial payment to my car”,

received by D, balance payable at the end of the month,
signed by A.
Is this contract pertaining to a contract to sell?

A: NO, there is already transfer of ownership, there was no

reservation as to ownership.

dacion en pago vs. contract of sale

»dacion en pago is a mode of extinguishing obli, it is a pecial
form of payment; while contract of sale is a source of obli.

Q: Kobe & companion B is to buy shoes, B’shoes to be

delivered, upon payment, Kobe ordered a particular shoe.

A: Kobe- contract of piece of work

B- contract of sale
»contract for a piece of work under (Aticle1467) is also
called Massachusetts Rule

Art. 1467. A contract for the delivery at a certain price of an

article which the vendor in the ordinary course of his
business manufactures or procures for the general market,
whether the same is on hand at the time or not, is a

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contract of sale, but if the goods are to be manufactured
specially for the customer and upon his special order, and
not for the general market, it is a contract for a piece of
work. (n)

Q: A to deliver his car to B, B to give A his watch plus

money, 100k. What law should govern?

A: 1st. depends on manifest intention of parties.

Barter = value of thing given as a part of consideration >
money/its equivalent; if value of watch >100k
Sale- if same value
Q: A granted B exclusive right (right to sell within a specific
area) to sell maong pants to Isabela, before B could sell, his
store was burned, can B be compelled to pay?

A: contract of sale bec. There is a stipulation. B is a

distributor/dealer 99.99% » Quiroga vs. Parsons- “will
supply the bed and pay price within a certain period”. No
obli to remit the price, no stipulation.

ELEMENTS OF SALE:
1. Consent
2. Price- consideration as to whom? The seller.
Buyer- acquisition of ownership over the thing.
3. Object

»Contracts which are void: Absolutely simulated contract

(parties voluntarily entered)
ex. To defraud creditors, wife hide property from husband,
buyer go abroad.

relatively simulated- why? To reduce tax liability, circumvent

law on legitime

SPECIFIC PERSONS PROHIBITED TO ENTER INTO

SALE
Guardian- absolute

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Agent- administration/sale

Q: A inherited property from father to transfer property;

executor to pay 700k, status?

A: valid; Assignment of rights which A can validly sell, not

part of the estate under Y’s administration.

Q: a sued B for recovery of a parcel of land, hired lawyer,

one year after filing, entered into a contract of sale with B
involving the land.

A: not valid. object of sale is subject to litigation-actually

depends. WON the case is still pending.

Q: 1491 status of contracts

A:GR: voidable
Except: agents- subject to ratification
Par.1,2,3 voidable- can be ratified
»private interests is involved.
4,5,6 void
1,2,3 can be ratified because after lapse of incapacity,
another contract maybe entered into Rubias VS. Materia
Wolfgang vs. Martinez

Art. 1491. The following persons cannot acquire by

purchase, even at a public or judicial auction, either in
person or through the mediation of another:
(1) The guardian, the property of the person or
persons who may be under his guardianship;

(2) Agents, the property whose administration or sale

may have been entrusted to them, unless the consent
of the principal has been given;

(3) Executors and administrators, the property of the

estate under administration;

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(4) Public officers and employees, the property of the
State or of any subdivision thereof, or of any
government-owned or controlled corporation, or
institution, the administration of which has been
intrusted to them; this provision shall apply to judges
and government experts who, in any manner
whatsoever, take part in the sale;

(5) Justices, judges, prosecuting attorneys, clerks of

superior and inferior courts, and other officers and
employees connected with the administration of
justice, the property and rights in litigation or levied
upon an execution before the court within whose
jurisdiction or territory they exercise their respective
functions; this prohibition includes the act of acquiring
by assignment and shall apply to lawyers, with respect
to the property and rights which may be the object of
any litigation in which they may take part by virtue of
their profession.

(6) Any others specially disqualified by law. (1459a)

Q: If both parties are capacitated to give consent, contract

of sale valid?

A: not necessarily because consent of one might had been

vitiated.

Q: A person sold a thing to another in representation of

another person without authority, status?

A: unenforceable

Q: can it be valid?

A: Yes, in case of statutory power to sell 1505; officious

manager, executor notary public (where pledgor can go to
NP to have the thing sold).

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Art. 1505. Subject to the provisions of this Title, where
goods are sold by a person who is not the owner thereof,
and who does not sell them under authority or with the
consent of the owner, the buyer acquires no better title to
the goods than the seller had, unless the owner of the goods
is by his conduct precluded from denying the seller's
authority to sell.

Nothing in this Title, however, shall affect:

(1) The provisions of any factors' act, recording laws,

or any other provision of law enabling the apparent
owner of goods to dispose of them as if he were the
true owner thereof;

(2) The validity of any contract of sale under statutory

power of sale or under the order of a court of
competent jurisdiction;

(3) Purchases made in a merchant's store, or in fairs,

or markets, in accordance with the Code of Commerce
and special laws. (n)

Q: contract of sale involving alien.

A: depends; if private agricultural, if he is seller, valid. If he

is the buyer, GR: NO. XPN: former natural born citizen.

Q: All matters could be a valid subject matter of sale.

A: every matter that can be a subject matter of contracts in

general can be subject matter of sale (service, things, and
rights). Service CAN NOT BE A SUBJECT MATTER OF SALE

Q: For rights to be a valid subject matter. of sale, what are

the requirements?
»for rights- conclusively presumed to be valid

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A: must be transmissible

Q: Sale of the right, known as?

A: assignment of rights

Q: if deed of assignment

A: sale? Not necessarily, if gratuitous- donation, maybe

dation in payment, or a security arrangement.

Q: rights arising from contracts

A: rights and obligations arising from contracts are

transmissible
XPN: NATURE, STIP, LAW (right in specific partnership
property)

Q: As to things to be valid subject matter?

A: determinate, capable of being determinate

example: buying a car in the casa outside commerce of
man, corpse
Q: Agreement between A&B, A sell palay that will be
harvested this November.
Q: Status of sale

A: sale is valid.

Q: if no palay is harvested, A is liable

A: GR: Yes, liable, if he was at FAULT, except if reason

was a FE

Q: sale of a sweepstakes ticket status?

A: depends, if winning ticket not void

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Q: A sold B land with right of repurchase within one year, 3 rd
month sold to C. what if on the 6th month, A offered to
repurchase land status of sale

A: Sale maybe valid. 1465 »

1. things (ownership over the thing) subject to a resolutory
condition may be the object of the contract of sale.
2. validity of contract requires Consent, Price, Object, the
fact that it is present, sale is valid

Art. 1465. Things subject to a resolutory condition may be

the object of the contract of sale. (n)

Q: Who will have a better right?

A: GR: A EXCEPT: C was a buyer in GF, no knowledge of

right of repurchase and right to repurchase WAS NOT
ANNOTATED

Q: when is a sale of right perfected?

A: upon meeting of the minds, consensual contract

Q: does it bind 3rd person?

A: No, unless in writing (public instrument)

Q: if in public instrument, binding already?

A: only requirement in real property

Q: deed of sale, no price mentioned, valid?

A: sale maybe valid.

Q: agreement A-B specific car, price is 500k yen.

A: valid, if so stipulated, 1458 “in money”

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Art. 1458. By the contract of sale one of the contracting

parties obligates himself to transfer the ownership and to
deliver a determinate thing, and the other to pay therefor a
price certain in money or its equivalent.

Q: if not in money, valid?

A: “its equivalent”

Q: can seller compel of lapad?

A: stipulated, RA8183 (currency stipulated) repealed RA 529

(only in philippine currency)

Q: why RA 529-because of dollar reserves problem

A: at that time, RA 8183, our dollar reserves improved

Q: sell specific car, amount of two academic load, 2

semesters status, valid?

A: No!
Gross inadequacy of price=lesion
-does not invalidate contract of sale
-guardian ,more than ¼ of value, contract of absentee

Q: A & B-price fixed by 3rd person

A: void if 3rd person refuse/unwilling to fix the price

Q: one peso as value of car

A: maybe donation/vitiation of consent

Q: parties to option agreement

A: promisor, promissee; offeror;offeree optioner,optionee

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Notes in Civil Law Review 2
»earnest money depends if perfected as to object,price
SOF-goes only to enforceability not validity of sale!
1487=1356

Art. 1487. The expenses for the execution and registration

of the sale shall be borne by the vendor, unless there is a
stipulation to the contrary. (1455a)

Art. 1356. Contracts shall be obligatory, in whatever form

they may have been entered into, provided all the essential
requisites for their validity are present. However, when the
law requires that a contract be in some form in order that it
may be valid or enforceable, or that a contract be proved in
a certain way, that requirement is absolute and
indispensable. In such cases, the right of the parties stated
in the following article cannot be exercised. (1278a)

Q: sale of ballpen 2k worth,valid? Enforceable?

A: value ‡ worth ‡ price, if sold to<400

1358- not a requirement for the validity of contract
- only goes to the enforceability

Art. 1358. The following must appear in a public document:

(1) Acts and contracts which have for their object the
creation, transmission, modification or extinguishment
of real rights over immovable property; sales of real
property or of an interest therein a governed by
Articles 1403, No. 2, and 1405;

(2) The cession, repudiation or renunciation of

hereditary rights or of those of the conjugal partnership
of gains;

(3) The power to administer property, or any other

power which has for its object an act appearing or

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Notes in Civil Law Review 2
which should appear in a public document, or should
prejudice a third person;

(4) The cession of actions or rights proceeding from an

act appearing in a public document.

All other contracts where the amount involved exceeds five

hundred pesos must appear in writing, even a private one.
But sales of goods, chattels or things in action are governed
by Articles, 1403, No. 2 and 1405. (1280a)

OPTION

 founded upon a consideration-no withdrawal allowed

 if option contract perfected, optionee nay file for
damages in case of breach
 option money- separated & distinct from the price
Q: May a person sell something he does not own?

A: As to validity, Yes! Sale will always be valid even if not

owned; ownership of the thing has nothing to do with
validity

Q: What do you call a sale where a person may sell

something he does not own?

A: Statutory Power to sell- 1505

Q: When should the seller has the right to sell?

A: At the time ownership is to pass

 If seller has no right to sell, buyer acquires no better
right

SCENARIOS WHEN SELLER HAS NO RIGHT TO SELL

BUT OWNERSHIP IS TRANSFERRED TO THE BUYER

1) ESTOPPEL
a) equitable estoppel/estoppel in pais

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
rd
-led 3 person to believe…
b) estoppel by deed-technical estoppel
-Art.1434

Q: Who is estopped?

A: the owner,that the seller has no authority to sell

c) estoppel by record-also technical estoppel

-estafa,owner testified that he is not the owner to free

the accused (said authorized even not)

2)MERCHANT STORE + GF
* unlawful & stolen-with reimbursement- Art.559
* not unlawful- no recovery-
Art.1505

Art. 1505. Subject to the provisions of this Title, where

goods are sold by a person who is not the owner thereof,
and who does not sell them under authority or with the
consent of the owner, the buyer acquires no better title to
the goods than the seller had, unless the owner of the goods
is by his conduct precluded from denying the seller's
authority to sell.

Nothing in this Title, however, shall affect:

(1) The provisions of any factors' act, recording laws,

or any other provision of law enabling the apparent
owner of goods to dispose of them as if he were the
true owner thereof;

(2) The validity of any contract of sale under statutory

power of sale or under the order of a court of
competent jurisdiction;

(3) Purchases made in a merchant's store, or in fairs,

or markets, in accordance with the Code of Commerce
and special laws. (n)

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Notes in Civil Law Review 2

2) SALE BY AN APPARENT OWNER + GF

a) recording laws-land registration decree –(now
involves forgery)
b) factor acts(old term for agency) sale made by agents
c) any other law- ex.goods covered by NDT incase of
bearer document when negotiated

Q: If bought from merchant store, is it possible to recover?

A: Yes, if buyer is in BF

Q: In GF,can owner recover?

A: Yes +reimbursement

CASE:SunBros.vs.Velasco(refrigerator)

*Buyer cannot recover if thing was not lost/stolen

Q: lady owned a painting w/c was stolen from her, owner of

house bought from gallery auction, can she recover?

A: Yes even w/o reimbursement public sale ‡ gallery auction

Q: lady owned a necklace w/c was stolen can the lady

recover?
A: Yes, Art. 559

Q: If delivery of certificate of ownership there is transfer of

ownership-ex: TCT, OCT

A: Quasi-tradition-what is delivered is a right -1501

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Notes in Civil Law Review 2
Art. 559. The possession of movable property acquired in
good faith is equivalent to a title. Nevertheless, one who has
lost any movable or has been unlawfully deprived thereof
may recover it from the person in possession of the same.

If the possessor of a movable lost or which the owner has

been unlawfully deprived, has acquired it in good faith at a
public sale, the owner cannot obtain its return without
reimbursing the price paid therefor. (464a)

Art. 1501. With respect to incorporeal property, the

provisions of the first paragraph of article 1498 shall govern.
In any other case wherein said provisions are not applicable,
the placing of the titles of ownership in the possession of the
vendee or the use by the vendee of his rights, with the
vendor's consent, shall be understood as a delivery. (1464)

Q: Public instrument, signed by notary, ownership passes?

A: No,because contrary intention may appear

CASE:MAPALO VS. MAPALO

Q: If at the time of the signing, buyer has no knowledge of

defect of title of seller?

A: May not be considered in GF bec. GF should exist up to

the full payment

Q: When can seller have possession if thing not lost/stolen?

A: If he acts as a depositary

Q: When can there be a transfer of ownership even w/o

delivery?

A: None! Ownership is transferred only upon delivery

Q: How many kinds of delivery are there?

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
A: Two kinds
1) Actual/Physical
2)Constructive
a) symbolica
b) tradition brevi mano
c) longa mano
d) constitutum possesorium
e) formal delivery
* there should be delivery= contract + possession
delivery of public instrument=formal delivery

Q: Delivery where seller still in possession?

A: constitutum possessorium
Symbolica- key to the place where goods are located
Longa Manu- why cant be delivered?
-may only be depository
]

INSTANCES WHERE SELLER STILL THE OWNER

DESPITE DELIVERY

a) conditional sale- ownership passess upon

fulfillment of condition bec. Ownership was reserved
b) sale/trial approval return- ownership is
transferred already but the buyer may revert title
back to the seller
c) sale on installment- not necessarily depends on
stipulation
1502(2)- Read instances when buyer deem to have
accepted goods

Art. 1502. When goods are delivered to the buyer "on sale
or return" to give the buyer an option to return the goods
instead of paying the price, the ownership passes to the
buyer of delivery, but he may revest the ownership in the
seller by returning or tendering the goods within the time

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Notes in Civil Law Review 2
fixed in the contract, or, if no time has been fixed, within a
reasonable time. (n)

Q: lapse of 12 hrs. will it be reasonable time as acceptance?

A: Yes, depending on the circumstances i.e. perishable

goods

Q: Contract to sell, when does ownership pass?

A: Upon full payment?when?

-execution of final deed of sale

Q: if thing is lost/destroyed, who is liable?

A: First to consider if due to FE, who is at FAULT

GR: if who is at fault, liable

Q: When can buyer bears loss?

A: If buyer is in delay
*RES PERIT DOMINO
XPN: 1) stipulation of reservation of ownership
2) security title-ownership was retained only for
purposes of security
-buyer bears the lost

Lawyers Cooperative Case

DOUBLE SALE

Q: A sold to B, A sold the same thing to C who took

possession

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Notes in Civil Law Review 2
A: depends on who registered it in GF. One must be in GF at
the time of the possession

Q: if both A&B did not take possession, did not register, is it

possible for B to have a better right?

A: if A was in BF; Immovable:

Registration of deed of sale in GF

Q: A 1st registered w/ knowledge of 2nd sale?

A: A has a better right, no knowledge of defect at the time

of sale

Q:A 1st register w/ knowledge of 1st sale?

A: 2nd buyer has better right

Q: no possession, can 2nd buyer have a right? Such as when

A sold to B who leased same land to A while A sold the
same land to C.
Who has a better right?

A: B has a better right. B 1 st took possession, B deemed to

be in legal possession
Q: A sold land to B (took possession)
A--------C (judgment CR sold;
Buyer, registered w/o knowledge of 1st sale
Can B have a better right?

A: Yes, if land is unregistered land, 1544 does not apply

Art. 1544. If the same thing should have been sold to

different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good
faith, if it should be movable property.

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Notes in Civil Law Review 2
Should it be immovable property, the ownership shall belong
to the person acquiring it who in good faith first recorded it
in the Registry of Property.

Should there be no inscription, the ownership shall pertain

to the person who in good faith was first in the possession;
and, in the absence thereof, to the person who presents the
oldest title, provided there is good faith. (1473)

Q: Delivery to common carrier=delivery to buyer?

A: depends on stipulation & reservation of ownership by

seller

Q: As to bill of lading, no delivery to buyer when?

A: on the face of bill of lading deliverable to the seller

Q: delivery to the common carrier-delivery to buyer? When?

A: if bill is not retained by seller

Q: delivered 10 dozens, 8 dozens was only delivered

A: accept 8, reject excess

Q: if less?

A: if agreed to partial delivery, may be compelled to accept

Q: if to deliver 8, only delivered 7 dozens & never delivered

1 dozen

A: WON at the time he accepted 7 dozens buyer knows that

seller will not deliver balance
If knows- contract rate
Does not know- FMV

Q: To deliver 1 sack durado, wagwag, when is the sale void?

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Notes in Civil Law Review 2

A: When what is to be delivered is indivisible, buyer may

reject

Q: Call seller demand increase in price of sale of land?

A: If lump sum-No!
If per unit measure- Yes!

Q: Price 1K-100 sq.m.area delivered is greater

A: Buyer may accept + payment of contract price

Q: if only 93 sq.m.

A: Remedies of buyer

a) may accept, proportional reduction

b) specific performance
c) damages
»less than 1/10 rescission is not a remedy
Rescission- remedy if buyer could prove that he would not
have bought land if less than…

Q: Is it possible for buyer to have the right to rescind if 100

sq.m. was delivered

A: Yes if land is inferior quality or if value is less than 1/10

of the value

Q: Bound to deliver upon perfection of sale

A: Not necessarily
1. stip as to period
2. no payment of purchase price

Q: If parties agreed…delivery after 5 days; is he obliged to

make deliver? When not obliged?

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Notes in Civil Law Review 2

A: not obliged to deliver if buyer does not pay yet

Not yet obliged-when the buyer loses the right to make use
of the period 1198

if buyer became insolvent?-if he delivers a security

PLACE OF DELIVERY
1) stipulation
2) place fixed by usage of trade
3) depends on nature of object
determinate-where thing is located at time of perfection
generic- seller’s place
USAGE OF TRADE
F.O.B.-free on board-seller shall only be liable to shoulder
expenses up to port of origin
C.I.F.-cost insurance freight
-delivery already taken place at port of origin
F.O.B.-port of origin(Mla)
-port of destination(Cebu)
»”these shipping arrangements are only presumptions,
parties may still stipulate manner & payment” – SC

OBLIGATION TO WARRANT

Caveat emptor- not adopted by Phil.Law;

De Leon bec. Of implied warranties.

BAR QUESTION:

Q:sale of parcel of land for IM, down payment Php 100,

bal.to be paid after squatters will be evicted, if within 6
mos.,squatters still there,seller shall return 100k, in 6
mos.,value of land doubled,squatters still there, seller
offered to return Php100k buyer did not accept,seller refuse
to execute final deed of sale,seller filed for rescission.

A: 1)NO! seller is not the aggrieved party

2)(1545) buyer given option to refuse to proceed with
contract

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Notes in Civil Law Review 2
3) waive the happening of condition & proceed with the
contract
*mere opinion not breach of warranty unless given by
expert.
*if warranty is as to title,fitness & characters,
mere opinion= express warranty
ex. Fertilizers to yield better harvest
guarantee ‡ warranty

Art. 1545. Where the obligation of either party to a contract

of sale is subject to any condition which is not performed,
such party may refuse to proceed with the contract or he
may waive performance of the condition. If the other party
has promised that the condition should happen or be
performed, such first mentioned party may also treat the
nonperformance of the condition as a breach of warranty.

IMPLIED WARRANTY
a) warranty against hidden defects
b) warranty in case of eviction
c) warranty of quality as to quality, fitness

WARRANTY IN CASE OF EVICTION

Q: is it required for buyer to be deprive?

A: also includes peaceful possession

Q: is it possible if buyer is not deprived of ownership but

deprived of possession?

A: Yes, in case of Contract of Lease

REQUIREMENTS:
1) there should be a final judgment in favor of 3rd person
-seller must be summoned,impleaded
2) based on a right prior to the sale
3) no valid waiver in the form of waiver intencionada

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Notes in Civil Law Review 2
4) act imputable to the seller after the sale (non-payment
of taxes, double sale in the case of the 2nd buyer)

Q: How about if somebody was already occupying the land,

acquired it by acquisitive prescription, buyer did not visit
land, can he hold seller for breach of warranty?

A: No!

VENDOR’S LIABILITY IN CASE OF EVICTION (see TABLE 1)

Waiver intencionada
»waiver made by buyer if he already knew of the defect of
the thing.
Waiver consciente
»waiver made by buyer where both buyer & seller knew that
there was no defect on the thing sold.
VENDOR’S LIABILITY IN CASE OF EVICTION
TABLE 1
Extent of If If there is waiver If there is no
liability of v Vendor in good waiver
vendor e faith
n conci intencio Vend Vendee
d ente nada ee in in bad
Warranty Against Hidden o
r
Good
faith
faith

Defects i
n

1) thing is already defective b

a
d
at the time of sell f
ai
2) he would not have bought t
h

if he knew/bought for less than .

1) val
the Php ue
of
Y
E
YES NO YES YES

the S
thi

Q: can buyer not hold seller ng

at
the
liable for hidden defects? tim
e
of
the

A: Yes if buyer was an expert evi

cti
on

Q: What if the thing which is 2) income

or fruits
Y
E
NO NO YES YES

defective was lost? S

3) cost of Y NO NO YES YES

suit E
A: XPN to 1174,vendor liable S

even through FE 4) expenses Y NO NO YES YES

of contract E
S

5) damages Y NO NO NO YES
and interest E
S

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Notes in Civil Law Review 2

EXTENT OF LIABILITY OF THE VENDOR IN CASE OF LOSS OF

THE THING WITH HIDDEN DEFECTS (SEE TABLE 2)

THE DEFECT CAUSE OF

LOSS: FE OR
FAULT OF
VENDEE
VEND VEND VENDO VEND
OR IS OR R IS OR IS
IN IS IN IN IN
BAD GF BAD GOOD
FAITH FAITH FAITH
1)
RETURN YES YES NO NO
PRICE

2)
PRICE/V NO NO YES YES
ALUE AT
THE
TIME OF
LOSS
3)
REFUND YES YES NO NO
OF
EXPENS
ES OF
CONTRA
CT
4) YES NO YES NO
DAMAGE
S
5) ONLY NO YES NO NO
INTERES
T

Q: Is it possible for vendor not liable for anything?

A: Yes, if vendor was not aware of the defect if the return

price is less than the value of the thing at the time of loss.

SALE OF ANIMALS WITH DEFECT

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Notes in Civil Law Review 2
Redhibitory- when even after the sale it cannot be seen
even by expert

Q: If 10 birds,1 defective, can be rescind?

A: GR: No.
XPN: if buyer could prove that he would not have bought
if he had known of the defect-- presumption if bought in
pairs

Q: If animal died 10 days after sale?

A: No, can recover if died within 3 days for a disease

existing at the time of sale.If died with contagious disease,
he can recover.

NON-APPARENT ENCUMBRANCE
Ex. Encumbrance on a Road
requirements-
1) non-apparent
2) not known to the buyer

Q: If knowledge of buyer can he hold seller liable?

A: Yes, if it was annotated in the title

Remedy: rescission/damages
Rescission- invoke within 1 yr. from date of contract

Q: If he filed damages 1 yr.& 6 mos, can the case prosper?

A: It depends on when was the discovery, damages should

be filed within 1 yr. from discovery

Q: If animals bought from fairs, auctions, no warranty at

all?

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
A: Not necessarily, only there is no warranty as to hidden
defects; there is still warranty as to title & warranty
against eviction
2nd hand sale- “as is where is basis”

Q: Is it correct to say that there is no IW in judicial/

execution sale?

A: No! there is still warranty by express provision of law-

warranty as to title even to judgment debtor except if he
was exempted fr. Such liability by order of the court.
 There are people who cannot be liable for warranties,
not sale without warranty/
Ex.: sheriff

RIGHTS AND OBLIGATIONS OF VENDEE

Q: If he received the goods, means acceptance?

A: not necessarily, “receive” is only preliminary to

acceptance, subject to inspection

Q: If buyer accepted, is seller discharged of his warranty?

A: No.
XPN: 1) stipulation
2) buyer failed to give notice of such breach within
reasonable time

Q: If goods already at the warehouse of buyer, informed

seller of refusal, fire broke out, can seller be liable?

A: It depends whether there has a just cause for refusal. If

no just cause, ownership is transferred to buyer, RES PERIT
DOMINO

As to Price
-payment to be made at place of delivery

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Notes in Civil Law Review 2
Q: 1/1/03 delivery----------1/1/04 buyer paid

A: can buyer be held to pay %?

NO.

XPN:
1) stipulation
2) thing delivered produces fruits
3) if buyer was already in default after Extra J demand
(needed if there was stipulation as to payment of price)
 contact of sale results to reciprocal obligation

Q: right of inspection, absolute?

A: No, no law providing for such

Buyer has no right to inspection preliminary to
acceptance
Ex.: delivery of mining co. of coal to NAPOCOR

BAR EXAM QUESTION:

Q: 1/1/03-----7/1/03 (delivery of mango plantation)

8/1/03 (delivered)
seller sold fruits to X between the period 7/1/03- 8/1/03
Can buyer recover the fruits from X?

A: 1537 only applies if both parties are already obliged, not

applicable if there is a stip as to delivery 1164-
7/1/03------5/1/03 Buyer entitled to fruits but 2 nd par. 1164
not yet delivered so, remedy is for damages

Art. 1537. The vendor is bound to deliver the thing sold and
its accessions and accessories in the condition in which they
were upon the perfection of the contract.

All the fruits shall pertain to the vendee from the day on
which the contract was perfected. (1468a)

MACEDA LAW RA 6652 REALTY INSTALLMENT BUYER ACT

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Notes in Civil Law Review 2
»only applies to residential realty
 not applicable to commercial & industrial sale on
installment= sale on credit
»sale on credit not necessarily sale or installment-maybe on
a straight term basis
 even only one instrument is paid, already covered by
MACEDA LAW
»60 days grace period without interest
if he paid at least 2 yrs.-entitled to CASH SURRENDER
VALUE-50% paid by buyer, only up to 90%
Grace Period-claimed only once every 5 yrs.
 there must be a delivery to the buyer of cash
surrender value not a mere notice
REMEDIES FOR BREACH OF WARRANTY
1) UNPAID SELLER 1526
a. withhold goods
b. stoppage in transit
c. resale
d. rescind
» GR: the following remedies are alternative except for
letter a and b.

MACEDA LAW

Q: A sold a house for 10M---downpayment of 3M was given

while remaining 7M will be paid in 60 equal monthly
installment defaulted 47th,49th, offered to pay arrears.Seller
cancel the sale,Cancellation Valid?

A: No. Paid for at least 2 yrs. He is entitled to 1 mo.for

every year.

Facts: 46 installments 3 days=90 days grace period. A is

within the grace period to update account.

Q: if seller only paid 80% can he invoke 1526?

A: Yes!

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Notes in Civil Law Review 2
Art. 1526. Subject to the provisions of this Title,
notwithstanding that the ownership in the goods may have
passed to the buyer, the unpaid seller of goods, as such,
has:

(1) A lien on the goods or right to retain them for the

price while he is in possession of them;

(2) In case of the insolvency of the buyer, a right of

stopping the goods in transitu after he has parted with
the possession of them;

(3) A right of resale as limited by this Title;

(4) A right to rescind the sale as likewise limited by this

Title.

Where the ownership in the goods has not passed to the

buyer, the unpaid seller has, in addition to his other
remedies a right of withholding delivery similar to and
coextensive with his rights of lien and stoppage in transitu
where the ownership has passed to the buyer. (n)

Q: If buyer paid seller a check, can 1526 be invoke?

A: Yes if check was dishonored not through the fault of the

seller

Q: Remedies exclusive?

A: No! he nay file action for specific performance/ damages

Q: Even if ownership had passed to the buyer, may seller

invoke 1526?

A: Yes! Ex. Constructive delivery

POSSESSORY LIEN- right to withhold the goods
lien – if goods already delivered
the buyer & seller not yet paid

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
»not required that buyer be insolvent
»seller will not lose lien over the goods
--requiring the buyer to pay

STOPPAGE IN TRANSIT
---seller must have parted possession
---buyer is insolvent
---goods are in transit
How exercised? By mere notice to common carrier
 if goods are covered by NDT,NDT should be
surrendered to common carrier
 in order for the goods to be no longer in transit, buyer
should have obtained it lawfully
Q: S-------------B
Has possessory lien, Does C
S loses his lien if B sold it to C?

A: No. Unless he consented; if B sold the goods to C

covered by NDT & was sold by B to C through negotiation &
C bought it in GF

RESALE
---seller must still have the goods
---maybe exercised if buyer is in default for unreasonable
time; if perishable goods are involve, if by stipulation seller
reserves right to resale

Q: if seller failed to give notice to resale, valid?

If no notice as to date, time & place

A: notice not necessary as to validity of resale. These notice

are valid only if seller use the ground that buyer has been in
default for immeasurable length of time.
2nd notice is relevant whether the sale is a GF sale.

Q: Buyer has unpaid Php 100,000, seller sold goods for

70,000 can he recover 30k from buyer?

A: Yes. As long as the sale is a GF sale

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Notes in Civil Law Review 2

Q: What if goods sold for Php 150,000, who is entitled to

50k?

A: seller shall not be responsible to the buyer for whatever

profit he may have obtained

Q: If from 100k, 50k was paid by buyer, remaining goods

sold for 100k, who is entitled?

A: seller! Is there unjust enrichment? No, it was the buyer

who was really at fault

Q: If the buyer already acquired ownership should seller

rescind 1st?
A: No. he can automatically resale as ruled by SC Katigbak
vs.CA

RIGHT TO RESCIND
---same requirements in resale except for perishable goods

RECTO LAW 1484

Art. 1484. In a contract of sale of personal property the

price of which is payable in installments, the vendor may
exercise any of the following remedies:

(1) Exact fulfillment of the obligation, should the

vendee fail to pay;

(2) Cancel the sale, should the vendee's failure to pay

cover two or more installments;

(3) Foreclose the chattel mortgage on the thing sold, if

one has been constituted, should the vendee's failure
to pay cover two or more installments. In this case, he
shall have no further action against the purchaser to
recover any unpaid balance of the price. Any
agreement to the contrary shall be void. (1454-A-a)

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Notes in Civil Law Review 2

Q: What are this recto law & maceda law in connection with
installment?

A: Recto law- sale & movable property on installment

1) EXACT FULFILLMENT/SPECIFIC PERFORMANCE
2) CANCELLATION
3) FORECLOSURE
(alternative in character)

Q: Sale of jewelry,10M, 100k,(10 yrs. Equal

rd
installment),buyer defaulted, 3 installment

A: exact fulfillment is the remedy

Q: after 1 month S filed action for recovery of balance?

A: As a rule no, only 100k is due. XPN if there’s an

acceleration clause

Q: defaulted 3rd installment, and so with 7th, can cancellation

of sale be involve?

A: No! cancellation to be involve 2/more consecutive

installment is defaulted

Q: If 3rd,4th, defaulted, cancellation, is seller compelled to

return all amount?

A: No! he may retain reasonable amt. for the use of the

thing

Q: Is it possible for S to retain everything?

A: Yes,if there is forfeiture clause

Q: Is it possible even if there is forfeiture, S is not able to

retain everything?

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Notes in Civil Law Review 2
A: Yes if amt. is unconscionable

Q: A bought brand new BMV, 5M installment basis. A

mortgaged his jewelries worth 5M to secure fulfillment
S foreclose.deficiency of 1M, can seller recover 1M from
buyer?

A: Yes! Bec. The very thing bought is not the thing

mortgaged. For 1484 to apply. It should be the thing bought
w/c is mortgaged.

BAR QUESTION:
Q: A bought car, seller required real estate mortgage aside
from the chattel mortgage covering the car. Seller foreclose
mortgage on the car, despite foreclosure there is still a
deficiency. May S, foreclose the real estate mortgage?

A: No! 1484 applicable

REMEDY OF BUYER
1) action for specific performance-determinate
substitute performance-generic thing
2) action for damage
3) rescission (1191)- if there was a substantial breach

MODES OF EXTINGUISHMENT

1) 1236 IN GENERAL- ORDINARY MODE

2) RESCISSION-those provided a law on sales-special
modes
3) EXTRA SPECIAL-REDEMTION
REDEMPTION
1) CONVENTIONAL-available only if there was an
agreement of repurchase

Q: Who has this right?

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
A: Seller, owners previous to the seller, assignee,heirs,
creditors of seller

BAR QUESTION: S (debtotr) sold land to B with right of

repurchase for 50K

Q: If seller offered 200k, can buyer refuse?

A: Yes! Bec. Seller is responsible also for the useful &

necessary expenses

Q: On 1/1/02 sold mango plantation 4/ 1/02 supposed

delivery but was only delivered on 10/1/06. if there were
fruits between the period it should had been delivered, Can
seller be compelled to pay entire 100k?

A: It depends if there were fruits at the time of the sale,

determine if buyer paid the fruits at the time of sale, when
it comes to repurchase seller should also pay.

Q: If no fruits at the time of sale, at the time of repurchase

there were fruits.

A: 75k value of fruits should be divided into proportion

counted unto the last anniversary date

BAR EXAM QUESTION:

Q: A sold to B land w/ right of repurchase, no fix period as

to repurchase – when should it be? If A failed to repurchase,
what will you suggest to your client?
»4 yrs, ownership of the thing delivered to buyer- not
absolute ownership-subject to resolutory condition of proper
exercise of right of repurchase
 if seller a retro failed,ownership of buyer becomes
absolute? If movable? Yes. Immovable? Yes!

FILE ACTION FOR CONSOLIDATION OF TITLE NEEDED

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
----Consolidation of title needed. Yes with respect to
immovable, necessary for buyer to be able to register the
prop in his own name

Q: If expiration of date of repurchase, can no longer

recover?

A: No! it might be an equitable mortgage; file for

reformation (read 1602 for presumptions)

Art. 1602. The contract shall be presumed to be an

equitable mortgage, in any of the following cases:

(1) When the price of a sale with right to repurchase is

unusually inadequate;

(2) When the vendor remains in possession as lessee

or otherwise;

(3) When upon or after the expiration of the right to

repurchase another instrument extending the period of
redemption or granting a new period is executed;

(4) When the purchaser retains for himself a part of

the purchase price;

(5) When the vendor binds himself to pay the taxes on

the thing sold;

(6) In any other case where it may be fairly inferred

that the real intention of the parties is that the
transaction shall secure the payment of a debt or the
performance of any other obligation.

In any of the foregoing cases, any money, fruits, or other

benefit to be received by the vendee as rent or otherwise
shall be considered as interest which shall be subject to the
usury laws. (n)

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
Q: Why would the CR have
Dr signed a sale w/ right of repurchase than a mortgage?

A: to avoid pactum commissorium

Q: Against whom should right of repurchase be exercise?

A: Anyone who derive the title from buyer a retro

Q: X with right to purchase

Q:
A B
C D
D sold to X his lot with right of repurchase, can X compel
D to repurchase entire land?
A: GR: No
XPN: If the thing is essentially an inadmissible thing ex.
Bungalow house, painting w/c is immovable by
destination
2) LEGAL-
a) co-owners- any prop
b) of adjacent lnd-immovable
Q: Co-owners

A B
C D
D donated his land to X, Can co owners redeem?

A: No! for redemption to exist; onerous title

Q: Same table, D sold the land to B, can their be a right

of redemption?

A: No! should be sold to other person for redemption to

arise

CASE: 3 bros. had mother title cancelled… RD registered still

in their names instead of one TCT each, despite actual
partition one of bro. sold, can the two redeem?

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Notes in Civil Law Review 2

A: As adjacent owner,Yes! But can’t claim as co-owner

Q: If only 350k is stated in deed of sale, actual payment is

1M, purchase price should be?

A: 350k only! Contrary to public policy case of Doromal

Q: If 1M is stated in deed of sale, 350k interest how much

can co-owner be compelled to pay in order to redeem?

A: 1M

Q: 2 sisters, A& B, A sold her interest to X-(2006) w/o B

knowing.
B paid real property tax & knew of the sale, informed X
right of redemption, can he still redeem?

A: When will the 30 days run? 30 days fr. Actual knowledge

Q: A-X (buyer) informed B of the sale, co-owner did not

react; buyer wanted prop. Be annotated at RD, RD send
another notice to co-owner (deadma!)
After more than a year, buyer filed for partition, co-owner
received summons, filed for redemption-prosper?

A: Yes! Notice in writing given by vendor not vendee,not RD

Alternative answer: No! bec. She already received notices,
the 30 day period should have already run
DOROMAL VS. CA notice should be w/ deed of sale!

TGMOct2007

IV.LEASE
Kinds of Lease
1. things- consensual contract; onerous
2. work or service
 Household service- Labor
 Employment contract- Labor

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Notes in Civil Law Review 2
 Contract for a piece of work- Civil
 Contract of Carriage- Commercial
3. Right

COMMODAT LEASE
UM
Essentially For a price
gratuitous certain;
onerous

 Q: What is the nature of the contract in the boundary

system?

 A: It is contract for the Lease of Service. Employment

contract which requires the elements of an employer-
employee relationship.

 Q: Is the lease of a safety deposit box, considered lease

of things?

 A: NO. It is a special kind of deposit. The lessee has no

control over the object.

Characteristics

 CASE Dimaculangan-
 In lease of things, a death of the party does not
extinguish the contract of lease.
 It is essentially onerous.
 Consensual, Nominate, Bilateral

 CASE:Bagtas-

 The 2nd bull was not turned over due to a fortuitous

event- crossfire during the era of the Huks. Is it a contract
of commodatum by which the government bears the loss?
 SC-This is a Lease.
Bagtas has to pay a certain
breeding fee.

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2

 Spouses, guardians and those enumerated under Article

1490 and 1491 cannot enter into a lease contract with each
other.

Art. 1490. The husband and the wife cannot sell property to
each other, except:

(1) When a separation of property was agreed upon in

the marriage settlements; or

(2) When there has been a judicial separation or

property under Article 191. (1458a)

Art. 1491. The following persons cannot acquire by

purchase, even at a public or judicial auction, either in
person or through the mediation of another:
(1) The guardian, the property of the person or
persons who may be under his guardianship;

(2) Agents, the property whose administration or sale

may have been entrusted to them, unless the consent
of the principal has been given;

(3) Executors and administrators, the property of the

estate under administration;

(4) Public officers and employees, the property of the

State or of any subdivision thereof, or of any
government-owned or controlled corporation, or
institution, the administration of which has been
intrusted to them; this provision shall apply to judges
and government experts who, in any manner
whatsoever, take part in the sale;

(5) Justices, judges, prosecuting attorneys, clerks of

superior and inferior courts, and other officers and
employees connected with the administration of
justice, the property and rights in litigation or levied
upon an execution before the court within whose

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
jurisdiction or territory they exercise their respective
functions; this prohibition includes the act of acquiring
by assignment and shall apply to lawyers, with respect
to the property and rights which may be the object of
any litigation in which they may take part by virtue of
their profession.

(6) Any others specially disqualified by law. (1459a)

As to Formalities

 Q: A appointed B as his agent. A withholds no power

against B granting the latter a Power of Attorney. B
entered into 3 contracts…
1) Contract of lease of parcel of land for 4 years and
a rental of 60,000php annually.
2) Contract of lease of a parcel of land with a rental
on a monthly basis of 3,000php.
3) Contract of sale of a parcel of land for 3x the
value of the land.
What is the status of these contracts?

A: 1) Unenforceable. What is authorized of B is an act of

administration. SPA is needed.
2) Valid and Binding. Rental of an immovable without a
fixed period, the same period as payment of rentals; It is an
act of administration only.
3) Void. Authorization of the agent is not in writing.

CASE Donald Dee- Documentary formalism is not an

element in employment.

BAR EXAM QUESTION:

Q: A leased a cockpit to B. During the pendency of the

lease, the cockpit collapsed. Who is liable for the collapse?

A: Lessor. His is the duty to repair, unless there’s a

stipulation to the contrary.

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Notes in Civil Law Review 2

CASE:Gonzales v. Mateo-

Lessee is liable because he

agreed to repair.

BAR EXAM QUESTION:

Q: A leased a parcel of land to B for 10 years. There was an

agreement to extend the Lease and it’s binding. B put up a
2-storey building. Upon expiration of the Lease, B failed to
renew the Lease. A filed an ejectment suit against B. B
contended that he is a builder in good faith thus
reimbursement of the expenses.

A: Builder in good faith cant be invoked. Lessee can’t build

in the concept of an owner. He is neither entitled to
reimbursement. The option is with the lessor if he opts to
retain ½ amount paid by the lessee or remove the
improvements though causing damages. Damages must not
be necessary, though.

Q: Is chapel a useful improvement?

A: Yes.

Q: There was a lease over a fishpond for 5 yrs. The rental

for next year will be reduced to ½. However, the harvest
was only ½ due to the rebels. The lessee contended that the
lease period is extended for 10 yrs now. Will there be a
reduction?

A: None. The right of reduction can only be invoked if failure

to harvest was due to an extraordinary fortuitous event such
as war, fire, pestilence. It does not include the intrusion of
lawless elements, flood, and typhoon.
» reduction can be allowed only in cases where B harvested
less than one half and that it should had been due to
fortuitous event

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
»lawless element is not a fortuitous event

Q: Will there be an extension?

A: None. Lease is suspended during the fortuitous event. He

can claim not to pay the monthly rental.
» Fortuitous event is not a reasonable ground for extension
but only for suspension of payment of lease during that
period

Q: May the lessee sublease with the consent of the lessor?

A: Yes. As long as it is not prohibited from subleasing.

Assignment of lease is valid if with the consent of the lessor.
In sublease, it is valid although absent consent of the lessor
provided it is not prohibited.

CASE:Manlapac v. Salazar-

A leased his fishpond to B till the end of June 1, 1947.

During the existence of the contract, B contracted with C,
the latter to have the rights in the fishpond. The contract
between B and C was made without A’s consent. The heirs
of A contended that the contract is void because it is only an
assignment.

SC- The lease agreement constitutes as an assignment only

if the lessee absolutely transferred all his rights to 3 rd
persons, dissociating himself in the lease. The 3 rd person
becomes the new lessee.
»there should be absolute transfer

CASE: Frezel vs. Mariano

There was a construction contract (labor and materials).

Frezel as the supplier. A took over the construction of the
building. C demanded payment from A. Is C, the owner,
liable for the unpaid amount? The claims of C are as follows:
There’s no privity between A and C. B is an agent.

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Notes in Civil Law Review 2

SC- There’s no agency because A’s extent of control over B

goes only into the result and not the manner, therefore, it is
to be considered as a contract for a piece of work.

C can recover from A

SC- Only to the extent of the unpaid amount by B to C.

Might be asked in the finals!

In 1952, A lease to B a house, in
1967 B transferred his rights to C.
Will the transfer be valid and
binding against A, the lessor?
A: It depends on the nature of the
transfer if it was assignment or
sublease.
SC: If the transfer of rights is
absolute, where lessee cease to be
lessee, then the transfer is not
bindind on the lessor however if
lessee reserves reversionary interest
no matter how small, it would be
binding on the lessor

 Termination of Lease

Q: A constructed a building for 5M and leased it to B. B will

be the lessee for 10 years for 100,000/month. After
completion of the construction, B will become the owner
thereof. On the 5th year, the entire building was burned. A
constructed another building. Before completion, B gave
notice to A that he will continue the lease. Can A refuse B as
lessee?

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2
A: Yes. With the original building destroyed by a fortuitous
event, the lease contract is extinguished, since there is total
destruction.

 Death of the lessee does not extinguish the lease. Except

is there is a stipulation to the contrary.

BAR EXAM QUESTION:

Q: A entered into a lease contract with B for 3 years. There

was a stipulation in the contract that B will have the option
to buy the parcel of land leased by him. However, B failed to
exercise the option as stipulated in the contract. B still
continued paying the rentals and A continues to receive the
same. B, now, exercised the option. A refused to sell the
land to B. Can A be compelled to sell the land?

A: There was a renewal of the lease known as IMPLIED NEW

LEASE.

Q: Does B have the right to exercise the option?

A: No. Only the terms and conditions GERMANE to the Lease

contract is deemed renewed. Otherwise, it is not renewed. If
payment be on an annual basis in the original contract, the
same period and manner of payment will also be adopted in
the renewed contract. NOTE ARTICLE 1670.

Art. 1670. If at the end of the contract the lessee should

continue enjoying the thing leased for fifteen days with the
acquiescence of the lessor, and unless a notice to the
contrary by either party has previously been given, it is
understood that there is an implied new lease, not for the
period of the original contract, but for the time established
in Articles 1682 and 1687. The other terms of the original
contract shall be revived. (1566a)

Pvt/101707

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2

V. AGENCY
Q: baptismal proxy, agency?
A: No. political and social relations are not included
»Agency refers only to juridical act
- BOUND himself to another
>objective : execution of juridical act
extinguish legal relationship such as payment

- there must be consent

- “ agency “ includes instrumentality as government
instrumentality.

CASE:Quiroga V. Parsons

– exclusive right to sell is an exclusive agency.

Nature of AGENCY vs. SALE

Consensual
Nominal
May be Gratuitous Essentially Onerous
*burden: principal
*presumption: for
compensation
Preparatory contract
-a means by which
other contracts may
enter into.
Based on trust and
confidence
There’s no transfer Ownership passes
of ownership but upon delivery.
only transfer of
possession.
AGENCY vs. CONTRACT FOR A
PIECE OF WORK
Extent of control by Extent of control by
the Principal over the the Principal over the
agent is with the agent is with the
Result and Manner. Result only.

AGENCY vs. NEGOTIORUM GESTIO

By agreement By law

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2

AGENCY vs GUARDIANSHIP
Person represented Person represented
must be capacitated is incapacitated

AGENCY vs PARTNERSHIP
Termination may be It has a separate
by the will of either juridical entity
party
 Principal-
revocation
 Agent-
withdrawal

KINDS of AGECY:
Actual
Apparent/Ostensible
Agency by estoppel

I. ACTUAL AGENCY

Mack vs. Cams (?)

X is clothed with full authority to manage restaurant of Y

(owner). X purchased some items from Z. X was indebted to
Z. Y’s defense is that X was not authorized to purchase.
However, X led other people to believe that X has authority
such as signing as agent.

SC-Estoppel lies. Y is liable.

II. APPARENT/OSTENSIBLE

Rallos vs. Yangco

A sent a letter to B authorizing C to buy abaca/copra. B
transacted with C. Consequently, from Jan. 2, the purchases
remained unpaid. B complained to A. A contended that

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Notes in Civil Law Review 2
before Jan. 2 he revoked the authorization from C.
Therefore, transactions hereafter are not binding upon A.
SC-Invoked Article 1873. Revocation is immaterial. C’s
transaction has full force and effect in exercising authority
until rescission. If C is specially informed of the revocation of
the authorization, B shall also be informed in the same
manner as C.
- JBL REYES: If B had actual knowledge of the revocation,
he cannot hold A liable as it would amount to Bad Faith.

Q: What if A actually caused a notice of publication?

A: Can still be liable pursuant to Article 1873

Art. 1873. If a person specially informs another or states by

public advertisement that he has given a power of attorney
to a third person, the latter thereby becomes a duly
authorized agent, in the former case with respect to the
person who received the special information, and in the
latter case with regard to any person.

The power shall continue to be in full force until the notice is

rescinded in the same manner in which it was given. (n)

Classifications of Actual Agency

 as to manner of creation
 express – consent of both parties given
 implied

CASE: Dela Pena vs. Hidalgo-

After the authorization was executed, the agent appointed a

substitute. The principal did nothing to repudiate
such appointment.

SC-There is an Implied agency by the principal’s silence or

inaction. The principal is deemed to have accepted
the new agency.

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Atty. Crisostomo Uribe
Notes in Civil Law Review 2

Agent

- When the agent is authorized to sell a parcel of land and

he just stared at the ceiling, he is NOT deemed to have
given his consent. However, if the agent accepted a
special power of attorney and he did nothing, it depends
upon the kind of business as to consider it as an implied
agency, with the agent giving his consent. If the principal
and agent are engaged in the same business, there is an
implied agency whereby the agent is deemed to have
given his consent.
Q: Mere silence of agent deem accepted agency?
A: not necessarily
»If parties are in the same place, no problem, stipulation on
the SPA governs
Q: if not in the same place such as when using the telegram,
if did not reply deem accepted?
A: It depends on the nature of the business, if the task is
also within the nature of the agency, yes.
Q: A authorized B to sell land of A in Baguio, did not do
anything, Is B an agent?
A: No.
Q: How about if A gave the letter to B and B accepted?
A: There is an implied agency

 As to consideration or compensation
 Onerous- presumption is for consideration.
 Gratuitous- liability is mitigated in the part of the
agent.

BAR EXAM QUESTION:

Contract of Agency as to scope of authority

1. Acts of administration
2. Acts of strict dominion

Q: In the sale of Rolex, the agent has no SPA, with the act
bind the principal?

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A: No. Any act of strict dominion requires an SPA.

As to form:
1. Oral
2.Writing
1. Oral
2.Writing
2.Writing

Q: Why is the form of agency peculiar?

A: Because it involves two contracts, the agency itself and
the contract to be contracted by the agent.

Q: Principal was in the hospital and

executed a GPA with the following:
- contact of lease of a parcel of
land with a term
- contract of lease with no
agreement as to term and
payment
- contract of sale for a three
times higher than the land
A: Discuss the status: Depends on the
power given, GPA was only given
» unenforceable if not in a public
instrument
» valid and binding if merely acts of
administration
» sale is void under 1874 ; SELLING IS
AN ACT OF STRICT DOMINION

Q : A is represented by B. There is a lease for 5 years and

such lease was not put into writing.

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A: First, determine the object. If it is personal, SPA is not
required. If it is an immovable, it depends on B’s capacity in
the contract of Lease.

Q: 3rd person is the lessee and the principal is the lessor,

SPA is needed. However, if the principal is the lessee,
authority of A must be in writing in order for it to bind B?

A: Not necessarily. For lease to be in writing or not, the

provisions on Statute of Frauds must find application.

BAR EXAMINATION QUESTION

Q: The deceased principal authorized the agent to dispose of

his land. The heirs of the principal, however, sold the 12
hectares to B. The agent sold the same land to C. Who has
the better right?

A: It depends on the authority of the agent. If it is not in

writing, the contract of sale is void. Thus, C has a better
right.

Q: If it is in writing, the authority of the agent is

extinguished. B has a better right?

A: Not necessarily. If the agent has no knowledge of the

death of the principal and C is in good faith, C being the 1 st
registrant, therefore, C has a better right.

»Notarization or recording in a public instrument is not a

requirement.

CASE:Jimenez-

X mailed a letter to Y giving him the authority to sell a

parcel of land. So Y sold the same to a third person. The
letter is sufficient to bind X.
» In a SPA, the only requirement must be in writing , need
not be notarized

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Essential Elements

1. consent of the parties

2. object
3. act within the scope
4. act in representation of principal
» 3 and 4 are not necessary to the validity of the contract
but these are the obligations of the agent. Absence of
these, Agency remains valid.
3 and 4 are the TWIN REQTS.
How to know whether it is within or in excess of authority?

 Consider the SPA.

CASE: Linan

- Whether or not the agent is authorized to sell a parcel of

land.

Justice Perfecto: under the SPA, he has no authority. Good

faith is not within the scope.

Rely on the provisions of law- the authority to manage the

restaurant includes the authority to buy the equipments.

Art. 1882. The limits of the agent's authority shall not be

considered exceeded should it have been performed in a
manner more advantageous to the principal than that
specified by him. (1715)

Article 1882- Considered within if it is to the

advantage of
the Principal.

CASE:Insular Drug-

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The agent’s authority to collect money does not include
encashing or endorsing of check.

Municipality of Ilo-ilo vs. Evangelista

»The authority to hire a lawyer includes authority to pay said

lawyer.

»If the agent’s authority to borrow money and

mortgage, he cannot use it to satisfy his own debts.

Q: A authorized B to borrow money from any bank, agent

borrowed money in his name to buy land, defaulted, can
bank go after the principal
A: No. Third person may have recourse against principal
except if it was property of principal which was involve

Q: SPA may be oral?

A: NO! It is a written authorization as the following
provision provides:
1871 “delivers”
1872 “transmit”
1900
1902 “presentation”

Art. 1871. Between persons who are present, the

acceptance of the agency may also be implied if the
principal delivers his power of attorney to the agent and the
latter receives it without any objection. (n)

Art. 1872. Between persons who are absent, the acceptance

of the agency cannot be implied from the silence of the
agent, except:

(1) When the principal transmits his power of attorney

to the agent, who receives it without any objection;

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(2) When the principal entrusts to him by letter or telegram
a power of attorney with respect to the business in which he
is habitually engaged as an agent, and he did not reply to
the letter or telegram. (n)

Art. 1900. So far as third persons are concerned, an act is

deemed to have been performed within the scope of the
agent's authority, if such act is within the terms of the
power of attorney, as written, even if the agent has in fact
exceeded the limits of his authority according to an
understanding between the principal and the agent. (n)

Art. 1902. A third person with whom the agent wishes to

contract on behalf of the principal may require the
presentation of the power of attorney, or the instructions as
regards the agency. Private or secret orders and instructions
of the principal do not prejudice third persons who have
relied upon the power of attorney or instructions shown
them. (n)

Rights and Obligations of the Agent

 His main obligation is to CARRY OUT THE AGENCY.

 If the principal died…
GR: The agency is extinguished.
EXC: If it will endanger the Agency, the latter shall be
continued

Ex: X sold the car to Y with the breaks in a defective

condition and without the principal’s knowledge, Y
bought the car. Therefore, the principal incurred
loss/damage.
(Art. 1888- An agent shall not carry out an agency if its
execution would manifestly result in loss or damage to
the principal.)

Art. 1888. An agent shall not carry out an agency if its

execution would manifestly result in loss or damage to the
principal. (n)

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Liability of Agents to 3rd persons:

Personally bound himself
Acted negligently
Acted outside the scope of his authority
 Even if the agent acted outside the scope of his

authority, the agent is NOT liable if:

The principal ratified the agent’s acts
The 3rd person was informed by the agent that he
acted outside
The 3rd person was aware thereof

CASE:Domingo vs. Domingo-

Whatever commission is received by the agent as a

consequence of his agency, albeit the absence of knowledge
of the principal of the agreement between the 3rd person and
the agent, the latter shall give to the principal whatever he
received.
The agent is not the insurer of the principal’s success in
business.

GR: The agent cannot sell the goods on credit.

EXC: Without consent of the principal, the sale is not void
but the principal holds him liable as sale in cash basis.

Q: When can agent be held liable?

A: When he bound himself.
Exception:
1. When the principal ratified
2. When 3rd person informed that agent is acting
beyond the scope of his authority
3. When agent informed 3rd person such as when he
promise to secure ratification and was not able to

Case Law
Q: P authorized A too sell his house and A introduced
prospective buyer. The buyer gave him 1K. P terminated the
authority of the agent and the agent went to RD and found

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out that a sale was consummated. A demanded commission,
can the case prosper?

SC: No. Failure of agent to deliver to principal even not

owing to him the 1k given by the buyer constitute a
forfeiture of agent’s right to commission

Case Law:
Q: Agent to collect P800 he was able to collect only P500
and deducted 20% as commission.
SC: The act of the agent constitutes estafa.

BAR EXAM QUESTION:

Q: A authorized B to sell property in Cebu, B appointed a

subagent. Can B appoint a subagent?
UPLAW Center:

A: Yes, under 1892 if it was not prohibited.

» Sir said with due respect to the UP law Center, the answer
is erroneous.
Subagent – does not take the relationship of B as agent;
assistant agent

Art. 1892. The agent may appoint a substitute if the

principal has not prohibited him from doing so; but he shall
be responsible for the acts of the substitute:
(1) When he was not given the power to appoint one;

(2) When he was given such power, but without

designating the person, and the person appointed was
notoriously incompetent or insolvent.

All acts of the substitute appointed against the prohibition of

the principal shall be void. (1721)

Substitute – “kapalit niya” Article 1892 shall apply

» if principal was informed of the substitute Article 1892
shall not apply

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Modes of Extinguishment (EDWARD)

E- expiration of the period

D- death
W- withdrawal
A- accomplishment
R- revocation
D- dissolution of entity
» not exclusive, Article 1231 also applies
 Other modes may apply to agency.

BAR EXAM QUESTION

Q: X authorized Y to sell a pendant with diamond. The

pendant was robbed. X sued Y. Y’s defense is robbery.

A: Austria Case

- Robbery is a fortuitous event.

- The perpetrators need not be convicted of robbery.

- For a fortuitous event to be a valid defense, there must

be no concurrent event.

- However, if it happened today, Agent is considered to be

negligent. If it happened in the 60’s, the agent is not
liable.

- The SC held that the agent is liable because there’s

negligence.

 On Death
Effect of death of the agent
 It will absolutely extinguish the agency. If the

agency is for the benefit of a 3rd person, the

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agency will continue to be in full force and effect
despite the death of the principal.
 Effect of death of the principal
If without knowledge and the agent is in good
faith, the agency is extinguished but the act of
registration in good faith even after the death of
the principal is valid as the law says so.

On Revocation
 May be made anytime; at will
 Q: If there’s a period, will the revocation before the
stipulated period hold the principal liable?

A: NO.

CASE:Barreto

Agency is based on trust and confidence therefore, the

principal can revoke anytime. P can only be held liable for
damages if he acted in bad faith.

CASE: Collongco

A authorized B to sell the land for 100M. B did not remit the
100M. What was agreed was that B will be the agent of A in
subdividing the land and constituting the house. The
proceeds will go to A as payment. The authority granted was
for 10 yrs. On the 5th yr., A revoked the authority given to
B. Was the revocation valid?

SC: NO. The agency is was coupled with interest and as

such, it cannot be validly revoked after the interest ceases;
means of fulfilling interest must be different from the
commissioner given; very interest that an agent is claiming
should be stated at the SPA without prejudice to his liability
if revocation was done in bad faith

Pvt/101707

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VI. PARTNERSHIP

BAR EXAM:
A used all his savings to put up a restaurant, B gave A 4k as
financial assistance in exchange of 20% profits, 22 years after B filed
action demanding profits. A denied and invoked prescription.
A: UP Law Center – Contract of Partneship exists because they
contributed to a common fund plus there was a stipulation as to profit.
»Sir said, no contract of partnership exists. There was no agreement
to contribute to a common fund, only financial assistance.

Q: Partnership vs. Co-ownership

A: Contract of partnership is created by mere agreement while co-
ownership is created by operation of law.

Essential Element:
» object is to engage in a lawful activity
 General Partnership and Limited Partnership (relevant only in
Limited Partnership)
Q: Can the spouses enter into a limited partnership and engage in
real estate business
A: Yes, prohibition is only on universal partnership

Q: Can two corporations organize a general partnership, can a

corporation enter into a partnership?
A: No! Corporation and partnership may organize a joint venture but
they cannot enter into partnership contract
» Sir said that Corporation can enter into a contract of partnership if
there was an express grant of power in its articles of incorporation.
(Tecson vs. Bolaños)
Q: What is the effect of illegality of contract? Can a partner recover
what he had given if cause was illegal?
A: Yes, because it will result in unjust enrichment.
Q; How about if both was in pari delicto?
A: If there was repudiation before there was any damage, the court is
in its discretion to allow recovery

BAR QUESTION: A and B put up a car repair shop. A contributed

money while B contributed his services. A likewise put up a coffee

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shop on the left side of the car repair shop. B likewise engaged in
another business of his own. Are they legally allowed to venture into
such businesses?

ANSWER: A under the facts can engage in such services since he is

only a capitalist partner. As to B, since he is an industrial partner, he
is prohibited from engaging in any kind of business without the
consent of the other partners.

» Partnership may be constituted in any other form. – Article 1172

Q: How about 3rd person who contracted with Partnership with

unlawful object, can recover?
A: Yes, as long as no knowledge of the illegality

 When one or more parties contribute an immoveable

If there is no inventory – VOID;

If there is an inventory, but not put in writing

 If such partnership is not put into public instrument -> it will not
affect the validity of the partnership agreement, though it may
affect the greater efficacy or the enforceability of the contract.

Case: Hernandez v. Angeles

» Form is not necessary for the validity, maybe necessary for

enforceability
»ENTITY THEORY/LEGAL PERSON THEORY means that a
partnership has a juridical personality separate and distinct from the
partners

 A general partner can be an industrial partner.

 Can a partner be both capitalist and industrial partner at the
same time? YES
 Can a limited partner be both an industrial and a capitalist
partner at the same time? NO
CLASSIFICATION OF PARTNERSHIP:
I. As to Object:
a) present property
b) profits

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II. a) General » all general partners
b) Limited » one or more general and one or more limited
partner; a limited partner (has no right to
partake in the management
Commercial Partnership » governed by Code of Commerce
III. As to term:
a) maybe for a particular undertaking (Ortega vs. CA)

Admission of a new partner

»If given a question concerning the liability of a newly-
admitted partner for a partnership obligation, ask, “when was
the partnership obligation incurred? Was it incurred PRIOR
TO / AFTER the new partner’s admission to the partnership?

Q: ABC partnership admitted D as new partner. The ABC partnership

incurred the following liabilities. ABC- 100; X- 30K, A- 50k. What is
the liability of D as a new partner? If A is a managing partner.
A: GR: up to capital contribution only unless he bound himself to be
solidarily liable
NOTA BENE: application of proportionate sharing:
a) if A is a general partner
b) both debts are due and demandable
c) receipt was given in the name of the partnership
d) payment should be applied to the most onerous
LIMITED PARTNER IS LIABLE WHEN:
a) he participated in the management
b) if surname appears in the partnership name except;
a) already existing surname
b) if also the surname of a general partnership
c) if at the same time general or limited partner

» Article 1892 subagent is not equivalent to substitute

» in having a substitute, must be with the knowledge of the principal.
(De la Peña vs. Hidalgo)

Proportional Application of Debts:

 One obtaining is a managing partner;

 Both debts are due and demandable;

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 If the partner receipted the amount in the name of the
partnership
 estoppel
 agency
 If the debt is more onerous

Property Rights of a Partner

 see the 3 major classification of the property rights of

partners
 plus right to formal accounting
 plus the right to the access of partnership book

 Rights in specific partnership property = a partner is co-

owner with his partners of specific partnership property;
see 1811 = co-ownership sui generis.
 Cf. co-ownership in partnership law and co-ownership in
property law. In the former, a co-owner may sell his share
even without the knowledge and consent of the other co-
owners, whereas, in partnership law, such would not be
allowed.
 Interest in partnership = pertains to the share in profits
and surplus.

Sharing of the Partners in the Profits and in the Losses

 if there is a STIPULATION (except when there is a stipulation

where one or more of the parties shall be excluded from the
profits, the stipulation shall be VOID)
 if there is NO STIPULATION , sharing shall be in proportion to
the capital contributions.
 What about the Industrial Partner? => give him the value of his
service; the balance of which should be distributes to the
capitalist partners in proportion to their capital contributions.

BAR QUESTION: A, B, and C entered into a partnership. Agreed to

Php360 share profits equally. C assigned his interest in the

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partnership to X. Therefore, X demanded share in the profits and
management. Are these demands of X legally justifiable?

ANSWER: As to the management, an assignee cannot participate in

the management, not even right to access… As to the share in the
profits, an assignee has the right to receive the profits the assignor
would have received. As to interest, a partner may assign however
limited only to the receipt of such amount and nothing more.
Therefore, to receive PHp 120k (360/3)

BAR QUESTION: W (industrial partner), X (industrial partner), Y

(P 50 K) and Z (P 20 K) entered into a partnership agreement. W
and X will act as managing partners. Thereafter, two persons
were appointed:. W and X appointed the SECRETARY, one of the
two persons appointed. Y and Z however opposed such
appointment. The ACCOUNTANT, the other person named, was
appointed by W and Z, whose appointment was however
opposed by X and Y. Whose appointment will bind the
Partnership?

ANSWER: The secretary’s appointment will bind the partnership. As

to the accountant, it should be resolved as to the partnership having
the controlling interest, such controlling interest being dependent on
the aggregate capital contributions of those who appointed vis-à-vis
those who opposed.

 MANAGEMENT ARRANGEMENTS
 One managing partner
 Solidary management
 Joint Management
 Partner as Agent

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RIGHTS/ OBLIGATIONS OF PARTNERS

 To make good his promise to contribute MONEY

PROPERTY INDUSTRY
 If money = equally, unless there is a stipulation
 If in default, he is a debtor of the partnership plus interest plus
damages (i= 12%)
 If property = ask what was actually contributed. Was it the
property itself or the use of such property. If property itself =>
transfer ownership plus obligation to warrant in case of eviction.
If thing was lost before delivery, the partner bears the loss, RES
PERIT DOMINO. See Exceptions (1) FUNGIBLE (2) FOR
SALE (3) WITH APPRAISAL.
 Partnership bears the loss if possession is with partnership
already.
 If services, SPECIFIC PERFORMANCE WOULD NOT LIE.
Remedy is to demand the value of service plus damages
incurred by partnership
PROPERTY RIGHTS:
1) specific partnership property » a partners is a co-owner as to his
co-parners not partnership;l co-
ownership is sui generis
2) interest
3) participate

Q: Can a creditor of a co-owner levy such interest of a co-owner in a

partnership land
A: Yes, but he cannot do so if indebted to partnership

Q: W and X are managing partners, Y-50k, Z-20k. W and X were

appointed as secretary by 2 persons, opposed to by Y and Z;
accountant appointed by W and Z but opposed by X and Y
A: In the 1st case, YZ has no right to oppose. In the second case,
controlling partners shall prevail based on capital contribution.
Appointment shall not be valid having opposed by Y who has
controlling interest. This case is called subsidiary management

FIDUCIARY OBLIGATIONS; Honesty and Good faith starts during

the negotiation stage. Obligation would continue not only up to
dissolution but also until termination.

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REMEDIES OF A NON-DEFAULTING PARTNER

 Specific performance
 Dissolution
 RESCISSION IS NOT A REMEDY

AS TO DISTRIBUTION:
»As to stipulation, if it excludes a partner, stipulation is void not the
partnership.
Share in the Losses:
1. determine agreement
Q: if one partner is excluded valid?
A: depends: if capitalist, stipulation is void; if industrial partner was
excluded – valid among partners but void as to third persons. –Article
1816
2. if no stipulation to losses, use stipulation on the sharing of profits
3. no stipulation at all = share in their capital contribution

LIABILITY AS TO:
Contractual Obiligation = joint
Joint and solidarily 1822 & 1823 – tortious/ wrongful acts of partners

Q: Bought set of SCRA in the account of the partnership, can

partnership be liable?
A: It depends if the act is for the apparent carrying of the usual
business of partnership.
Q: Can partnership be liable even if not related to the business?
A: Yes, if such party was not authorized

DISSOLUTION:
» change in relation where partner ceases to be associated in
carrying on the business of partnership
»marriage of partners not a ground

Entry of a new Partner

 General Rule: It will dissolve the partnership

 Exceptions:
a) act is necessary to wing up partnership affairs
b)

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CAUSES OF DISSOLUTION
1) extrajudicial
a) voluntary » No. 1 & 2 of Article 1830
b) involuntary » No. 3-7
2) judicial Article 1831
Q: A B C assigned whole interest to X against the will of A & B and
decided to dissolve the partnership, X filed for a dissolution, which
dissolution will be valid?
A: That made by A & B is valid. X was mere assignee, no legal
interest to file dissolution for he is not by law a partner.

DEATH OF A PARTNER:
» if general, partnership is not extinguished if biz nis continued or
not stated due to unanimous consent.

EFFECT of DISSOLUTION:
» termination of authority of partners.

LIABILITY NOT GIVEN POWER TO

OF APPOINT
SUBSTITU
TE

All acts of LIABLE if NOT LIABLE

the substitute if the
substitute acted substitute
appointed outside the acted within
against the scope of the scope of
prohibition authority or authorization
of the there is bad representatio
principal faith or n of the
shall be negligence principal and
void on the part acted with
of the due diligence
substitute and in good
faith

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» the agent
is not an
insurer of the
success of
the business
of the
principal

EFFECTS OF APPOINMENT OF SUBSTITUTE/LIABILITY IN

DAMAGE TO PRINCIPAL
GIVEN POWER TO APPOINT

Designate Not designated

d

Not liable Agent shall be Not liable

unless he responsible for the as agent
knew that acts of the shall NOT
the substitute if be
designate substitute is responsibl
d person notoriously e for the
is incompetent or acts of the
notoriousl insolvent substitute
y if the
incompete substitute
nt or is
already notoriousl
insolvent y
incompete
nt or
insolvent

VII. CREDIT TRANSACTIONS

 not the same as bailment

 not all credit transactions are bailment
 in bailment, there has to be a delivery (deposit,
loan, mutuum, commodatum)
 in some credit transactions, delivery is not necessary
(guaranty, mortgage)
 sale may be a credit transaction of the sale is on
credit

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 not all credit transactions are contracts (judicial
deposits, legal deposits)

Loan
 consider first the kind whether mutuum or
commodatum
 mutuum or simple loan- the agreement between
the parties to constitute a loan is already a binding
agreement, however, unless it is delivered there is
no perfected contract of loan yet.
 If the contract of loan is not yet perfected, cannot
be revoked
 In mutuum, if without express stipulation, contract
is compensatory
 case: Rep vs Bagtas

 case: Soccoro- What is the effect of a declaration

that the interest is unconscionable? Still liable to pay
interest but at the legal rate
 in a contract of commodatum, the bailor need not
be the owner because there is no transfer of ownership
 in mutuum, lender has to be the owner
 precarium, a special form of commodatum wherein
the bailor may demand the thing at will (1947)
 RA 8183 all monetary obligations shall be settled
in Philippine currency which is the legal tender. However,
parties may agree that the obligation be settled in other
currencies
 thing pledged must be delivered to the creditor
unlike in chattel mortgage and real estate mortgage

Deposit
 essentially gratuitous, unless stipulated otherwise
 irregular deposits- a depositary has the right to
use the thing
 in deposit, object cannot refer to future thing
because it requires delivery

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 MOTO-Q NOTES
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Atty. Crisostomo Uribe
Notes in Civil Law Review 2

 characteristics

a) principal
b) real
c) gratuitous or onerous

 kinds of deposit
a) judicial
b) extra-judicial

i. Conventional / voluntary
ii. Necessary
iii. Legal

Guaranty

 covered by the Statute of Frauds

1. Personal- personal commitment to answer for the debt,

default of
another
2. Real – guarantor delivers collateral
a. pledge
b. chattel mortgage
c. real estate mortgage
d. antichresis

 continuing guaranty – Art. 2053

 the only parties in guaranty are the creditor and
the debtor
 sub guarantor- benefit of excussion
 co-guarantor- benefit of division
 guarantor- insures the solvency of the debtor
 surety- insures the solvency of the debt

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 MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2

Pledge/ Mortgage

 free disposition means that the mortgagor

should be capacitated
 pledge may be perfected even if delivery is
merely constructive
 liability of the pledgor or mortgagor is only up to
the value of the pledged/ mortgaged property. Nawala na
sa kanya yung property, kaya tama na yun unless
expressly stipulated otherwise
 creditor cannot recover if property is covered by
Recto Law
 no right of redemption in chattel mortgage and
pledge

TABLE 1

PLEDGE All are Real Unilater

accessory Article al
contracts 1316,
Article
A pledge 2093)
or
mortgage
cannot But a
exist promise to
without a constitute
valid a pledge
obligation gives rise
to a
personal
action
between
the
parties;
public
interest.

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO 13
 MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2
unilater
CHATTEL Neverthel Solemn or al
MORTGA ess, a Formal
GE pledgor (De leon)
or CM
mortgago Registratio
r maybe n is
constitut indepensa
ed to ble. If not
guarante recorded,
e the binding on
performa the
nce of a parties.
voidable/ Promise to
unenforc constitute
eable mortgage.
contract. Affidavit
It may of GF to
guarante binf 3rd
e a parties. If
natural not
obligation executed,
mortgage
may still
bind third
persons if
the latter
had
knowledge
of the
promise to
constitute
mortgage
REAL Solemn.
ESTATE (Vitug)
MORTGA Must be
GE recorded,
» maybe if not
foreclose binding to
d even if parties.
only promise»
written in personal/a
a private ction
instrume
nt
BILATE
ANTICHR A Solemn. RAL
ESIS condition
al Amount of
obligation principal
may also and
be interest
secured. must be in
writing, if
not void.

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO 13
 MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2

TABLE 2

KINDS RIGHT TO USE RIGHT TO INDIVISIBI

APPROPRIA LITY
TE
(PACTUM
COMMISOR
IUM)

PLEDGE NONE, unless Creditor Pledgor or

1. authorized cannot Mortgagor
2. necessary appropriate is
for the . Any indivisible,
preservati stipulation eventhough
on of the to the debt may
thing contrary is be divided
CHATTEL Not applicable null and among the
MORTGAG unless void. successors-
E stipulated in-interest
However, in of the
pledge, if at debtor/
REAL Not applicable the first creditor.
ESTATE unless auction the
MORTGAG stipulated thing sold, EXCEPT:
nd
E a 2 one Where
with the several
same things are
formalities given in a
shall be pledge or

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 MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain
Atty. Crisostomo Uribe
Notes in Civil Law Review 2
ANTICHR Only right to held, but mortgage,
ESIS receive fruits there is no each one of
unless sale either. them
stipulated. Creditor guarantees
may only a
appropriate determinate
but the portion of
shall acquit the credit.
the entire
claim. Right of
Extinguish
Encashmen ment.
t of a
deposit Indivisibility
certificate is not
given as affected by
security. the fact
» not that the
postdated debtors are
check not
(Chua vs. solidarily
CA, Sept. liable.
26, 1989)

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 MOTO-Q NOTES
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Atty. Crisostomo Uribe
Notes in Civil Law Review 2

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO 14
TABLE 3: RIGHTS OF MORTGAGOR
KINDS RIGHT OF RIGHT RIGHT TO SPECIFIC PERFORMANCE
SALE/ TO BID RECOVER
FORECLOSU DEFICIENCY
RE
Article 2112 YES. VOLUNTARY: YES, but pledged deemed abandoned.
PLEDGE The creditor Provide None even if
to whom d he is there’s
the credit the not stipulation.
has not the only Article 2112,
been bidder. Article 2115
satisfied in Article
due time 2113 LEGAL: YES
pledged
may
proceed
before a NP.
Xxx
1. Judicial YES. Except YES, but chattel mortgage deemed
CHATTEL Foreclosure on abandoned.
MORTGAGE Sec.13 installment.
Article 1508

2.
Extrajudicial
Foreclosure
Sec. 14
Article 1508
REAL ESTATE 1. Judicial YES. Rules of YES, but security deemed abandoned.
MORTGAGE (Rule 68 of Court on
KINDS the TO
RIGHT Rules of
ALIENATE Foreclosure.
RIGHT TO RIGHT TO RECOVER EXCESS EQUITY OF REDEMPTION
Court) BID
2.
Extrajudicial
Foreclosure
Act. 3135
ARTICLE 2097 YES! YES VOLUNTARY: NONE:
PLEDGE
ANTICHRESIS ARTICLE 2108 ARTICLE ARTICLE 2115 NONE
2113 LEGAL: YES, ARTICLE 2121

Equity of redemption within 90

CHATTEL Sale valid and buyer may YES. Act 1528 days from order of foreclosure.
MORTGAGE acquire ownership but if After foreclosure no right of
not consented to by redemption.
mortgagee, mortgagor is Equity of redemption within 90
criminally liable. (Art. 319 days from foreclosure. After
RPC) foreclosure no right of
redemption. Except foreclosure
REAL ESTATE Article 2130 A stipulation YES (Rules of Court on of real property by banking
MORTGAGE forbidding the owner from Foreclosures) institution and in extrajudicial
alienating the immovable foreclosure of real property—
mortgaged shall be void. full amount of purchase price
within 1 year
YES. Article 2137, Rules on
ANTICHRESIS Same as above, Article Foreclosures
2130.
TABLE 4: RIGHTS OF PLEDGOR
VII. TORTS
» there is no need for a pre-existing contract
Q: Why file for action for quasi-delict?
A: Claim for moral damages which has many grounds

Essential Elements:
I. Act or Omission there being fault/negligence
» negligent act, even acts punished by law
Dulay vs. CA
» Quasi-delict is not limited to negligent acts, even a malicious or
intentional act may be the basis of a quasi delict.

Article 2177
» acts punished by law maybe the basis, the only exception is that
there be no double recovery

Q: May an action for quasi-delict subsist with a criminal case?

A: Yes, they are distinct from each other

Q: Driver in a acquitted in a criminal case, heirs filed civil case for

quasi-delict, may action prosper?
A: Yes, in quasi delict mere preponderance of evi is enough

II. DAMAGES

» any hurt or harm inflicted

Q: What will be the degree of diligence required?
A: That of a good father of a family or that which the law provides
Extraordinary » common carrier, doctors, banks
Q: Who has the burden of proof?
A: plaintiff

III. CAUSAL CONNECTION BETWEEN ACT OR OMISSION AND

DAMAGE

- end-
Share niyo to!

To God be the glory

 MOTO-Q NOTES
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Atty. Crisostomo Uribe notes
Civil Law Review 2

14
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Atty. Crisostomo Uribe notes
Civil Law Review 2

15
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Atty. Crisostomo Uribe notes
Civil Law Review 2

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Atty. Crisostomo Uribe notes
Civil Law Review 2

15
Bogs Quitain; Tere Morales; Paulette Tongcua; Tino Occiano; Budz Occiano